| Monetary Policy |    3820 VIEWS  |
| Monetary Policy | |
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| PROSHARE | |
| PROSHARE | |
Monday, March 16, 2020 /07:45 PM / By CBN /
Header Image Credit: EcoGraphics
The Corona Virus (COVID
19) pandemic is having significant adverse consequences for both the global and
the Nigerian economies. It has already led to unprecedented disruptions in
global supply chains, sharp reduction in crude oil prices, turmoil in global stock
and financial markets, massive cancellations in sporting, entertainment and
business events, lockdown of large swaths of movements of persons in many
countries, and intercontinental travel restrictions across critical air routes
in the world. These outcomes have had serious adverse implications for key
sectors including but not limited to oil and gas, airlines, manufacturing,
trade and consumer markets.
The Central Bank of
Nigeria (CBN) in furtherance of its financial stability mandate is committed to
providing support for affected households, businesses, regulated financial
institutions, and other stakeholders in order to cushion the adverse economic
impact of this pandemic.
Accordingly, the CBN
hereby announces the following policy measures:
Extension
of Moratorium
All CBN intervention facilities are hereby granted a
further moratorium of one year on all principal repayments, effective March 1,
2020. This means that any intervention
loan currently under moratorium are hereby granted additional period of one
year. Accordingly, participating financial institutions are hereby directed to
provide new amortization schedules for all beneficiaries.
Interest
Rate Reduction
Interest rates on all
applicable CBN intervention facilities are hereby reduced from 9 to 5 percent
per annum for 1 year effective March 1, 2020.
Creation
of a N50bn Targeted Credit Facility
The CBN hereby establishes
a facility through the NIRSAL Microfinance Bank for households and small- and
medium-sized enterprises (SMEs) that have been particularly hard hit by
Covid-19, including but not limited to hoteliers, airline service providers,
health care merchants, etc.
Credit
Support for Healthcare Industry
To meet potential increase
in demand for Healthcare services and products, the CBN hereby opens for its
intervention facilities, loans to pharmaceutical companies intending to
expand/open their drug manufacturing plants in Nigeria, as well as to Hospital
and Healthcare practitioners who intend to expand/build the Health facilities
to first class centres. This is in addition to growing the size of existing
interventions to the Agricultural and Manufacturing sectors in Nigeria.
Regulatory
Forbearance:
The CBN hereby grants all
Deposit Money Banks leave to consider temporary and time-limited restructuring
of the tenor and loan terms for businesses and households most affected by the
outbreak of Covid-19 particularly Oil & Gas, Agriculture, and
manufacturing. The CBN would work closely with DMBs to ensure that the use of
this forbearance is targeted, transparent and temporary, whilst maintaining
individual DMB's financial strength and overall financial stability of the
system.
Strengthening
of the CBN LDR Policy
In view of the success of
the LDR Policy in growing credit to the economy and reducing interest rates,
the CBN would further support industry funding levels to maintain DMBs' capacity to direct credit to individuals, households, and businesses. We will
also consider additional incentives to encourage extension of longer tenured
credit facilities. DMBs are encouraged to continue to build capital buffers in
order to improve resilience of the sector.
The Bank stands ready to
provide liquidity backstops as and when required in view of its role as Banker
to the Federal Government and lender of last resort. The CBN shall continue to
monitor developments and will issue further updates as may be appropriate.
Related
News
Related News
- #Coronavirus
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