Rising from its May 2020 Monetary Policy Committee (MPC) meeting on Thursday, the Central Bank of Nigeria (CBN) advised the federal government to consider the full opening of the nation’s economy and move aggressively to implement policies that will halt economic decline and engender growth to save jobs and livelihoods.
Briefing journalists on key decisions taken during the meeting, the CBN Governor, Mr. Godwin Emefiele, said the government must not, in a bid to save lives through the lingering lockdown order, destroy livelihoods.
He disclosed that analysis at the CBN suggested that if the economy is re-opened and aggressive stimulus package is not pursued to pump more funds into the economy, the prospects are that its current reversionary trend may be reversed and return to growth in the fourth quarter of this year
Nigeria’s economy is predicted to post a -3.4 negative growth by the end of 2020 by the IMF, a prediction the CBN said can be revered with the right policy tools and actions.
To demonstrate its commitment to the growth of the economy, the MPC decided in favour of a reduction in the Monetary Policy Rate (MPR), the benchmark interest rate, by 100 basis points from the previous13.5% to 12.4%.
It, however, held other policy parameters constant by retaining the asymmetric corridor of +200/-500 basis point around the MPR, cash reserve ratio (CRR) at 27.5% and the liquidity ratio (LR) at 30 percent.
Emefiele, who is the chairman of the committee, said: “Yes the trend (COVID-19 positive cases) is still rising but as we are trying to save lives, we must also save livelihoods. One way to save livelihood is that we must confront the fact that we must open the economy. We must get our farmers to back to our farm. We must get our manufacturing plants back to life again. We must begin to see the fumes coming out of the rooftop of these manufacturing companies.
“If we don’t, the unprecedented unemployment that will face us resulting from production and manufacturing plants shutdown will be unprecedented that we would have hurt so badly livelihoods that we thought we wanted to protect because we were saving lives, as a result of the lockdown.
“We must reopen the economy but still take into cognisance all the protocols from the health ministry”, the CBN governor stressed.