The Central Bank of Nigeria (CBN) on Saturday said the total package to stimulate the economy against the impact of coronavirus, which is rapidly spreading amounts to N3.5 trillion.
Godwin Emefiele governor of the CBN disclosed this on Saturday at an extraordinary bankers committee meeting comprising of bank CEOs and CBN directors held in Lagos.
Part of the stimulus package is the N1.5 trillion InfraCo project for building critical infrastructure, N1.5 trillion loan to boost local manufacturing and production across critical sectors, among other packages.
The CBN had earlier announced a six-point palliative to ameliorate the continued impact of the coronavirus on the Nigerian economy.
He said the exchange rate of N380 per dollar at the Investors and Exporters (I&E) forex window was not a devaluation but an adjustment.
“CBN has a responsibility to see to adjustment in currency. What you have seen is an adjustment in currency. We have also been accused that we have a hand. We don’t have a hand,” Emefiele said.
The CBN on Saturday devalued the Naira as the official exchange rate is now at N360 per dollar.
The official rate which stood at N307 per dollar as of Friday is now pegged at N360 according to data from the CBN website.
Razia Khan, Managing Director, Chief Economist, Africa, and Middle East Global Research, Standard Chartered said devaluation now will help to boost fiscal receipts in Naira, helping to compensate for the weaker oil price.
“Having seen the I&E FX rate trade higher, we think this also demonstrates a more proactive stance to exchange rate management on the part of the authorities,” Khan said in an email response to BusinessDay. The official FX rate denotes the rate at which the CBN buys FX from oil companies. It is also the rate that Nigeria uses to calculate oil revenue in the budget.
Charles Robertson, 2019 · Renaissance Capital’s Global Chief Economist, said it is a very smart and helpful move by the central bank which will improve the flow of Naira to Nigeria’s states.
“It helps avoid more stringent budget cuts that countries like Saudi Arabia have to do because they cannot move their currency,” Robertson told BusinessDay by email.
Taiwo Oyedele, Head of Tax and Corporate Advisory Services at PwC said, thinks adjusting the official Naira exchange rate to N360 is the right thing to do and this should have been done long ago.
“I will not consider it a devaluation but a removal of the discount to better reflect economic reality. In fact, the CBN should harmonise all exchange rates into one, this will boost confidence in the foreign exchange market and block the loophole for arbitrage,” Oyedele said.
At part of efforts to improve FX supply, the CBN on Saturday directed that all oil companies (International and domestic) and all related companies (oil Service) sell FX to CBN and no longer NNPC.
The committee identified a few key local pharmaceutical companies who shall be granted Naira and FX funding facilities to support the procurement of raw materials and equipment required to exponentially increase local drug production in Nigeria.
These include but are limited to Emzor, Fidson, GSK, May & Baker, Unique Pharma, Swiss Pharma, Neimeth, Sagar, Orange Drug, and Dana Pharma.
