The Central Bank of Nigeria has announced measures to cushion the effects of coronavirus on the Nigerian economy.
The apex bank predicts that the global economy will definitely go into recession as a result of the prevailing situation around the world.
Amongst the measures announced are a Reduction in interest rate on all its existing interventions from 9% to 5% from March 1st.
The regulator said it acted in response to the coronavirus pandemic which has devastated the global economy creating unprecedented disruptions in global supply chains, sharp reduction in crude oil prices, turmoil in global stock and financial markets.
In a briefing, the bank’s Governor, Mr. Godwin Emefiele said: “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.”
The apex bank in a statement further announced other policy measures as follows:
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.
STRENGHTENING 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 apex bank added that it “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.”
