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Nigeria’s Central Bank raises lending rates to 18%, as inflation figures rise

Published

2 years ago

March 22, 2023

In a move that is aimed at managing the increasing inflation rate, Nigeria’s apex bank has raised the benchmark for the lending rate to 18 percent.

The bank’s governor, Godwin Emefiele, announced the new interest rate bank’s Monetary Policy Committee (MPC) meeting that began Monday. He said the committee voted to keep the asymmetric corridor at +100 and -500 basis points around the MPR.

Mr. Emefiele disclosed that the MPC voted to keep the Cash Reserve Ratio (CRR) at 32.5 percent, as well as the Liquidity Ratio at 30 percent.

Under the cash reserve ratio (CRR), commercial banks have to hold a certain minimum amount of deposits as reserves with the central bank. The percentage of cash required to be kept in reserves against the bank’s total deposits is called the Cash Reserve Ratio.

The inflation rate for February 2023 in Nigeria hit 21.91% as cash and fuel scarcity continue to bite hard in the West African country.

Emefiele believed that consistency in the recent monetary policies by the apex bank is helping to manage rates.

“We believe that as we continue this process that inflation will eventually begin to trend downwards,” he said.

“Whether we like it or not, between now and May, or the end of the administration, we will expect that subsidy will disappear. Subsidy removal has its own implication on prices which is inflation, so we are not optimistic that prices will continue to come down because of these measures but we feel we need to continue to tighten,” he said.

Nigeria has been on a recent trend of monetary policy in a bid to rescue its struggling economy. The bank recently introduce new designs of the N200, N500, and N1,000 in a move to mop excess cash circulation. According to the CBN, over 80% of cash in circulation was outside the banking system when the policy was announced.

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IMF mission concludes 4th loan program assessment in Egypt

Published

1 day ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

3 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.