Despite inflation, stagnation, Emefiele insists Nigeria’s financial system is strong

The Governor of Nigeria’s Central Bank, Godwin Emefiele, Tuesday, insisted that the country’s financial system is still strong despite astronomical inflation rate and economic stagnation.

The CBN governor made the declaration at a closed door session with the Senate, where he gave a comprehensive account of the performance of the Nigerian economy in the last one year.

Emefiele also explained to the senators the situation of the economy and measures that were being taken by the Federal Government to remedy the situation.

According to reports, the CBN governor’s presentation started with the global economic outlook which has been characterized by external shocks including the sharp decline in commodity prices, the geopolitical tensions along important global trading routes, and tightening of Monetary Policy in the United States of America.

Speaking after the closed door session, the Senate President, Bukola Saraki, gave an overview of what was discussed thus: “The Senate in a closed door session with the CBN Governor deliberated on the new foreign exchange management policy and the determination of foreign exchange market by demand and supply mechanism, the need to continue to grow the economy and still focus on diversification of the economy and also as regards the issues of some of the commercial banks. Thereafter, he answered questions from distinguished senators on some of these topical and national economic matters. Is this a true reflection of what transpired in the closed door session.”

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The CBN, in a statement after the meeting, said the CBN governor drew a linkage between global occurrences with the Nigerian economy, especially the over 70% decline in oil prices from about S116 per barrel in June 2014 to about $30 per barrel earlier in the year.

The statement read: “The Governor’s presentation also gave the Senators insight into the Bank’s decisions in the Foreign Exchange Market, and the rationale underlying the recent re-introduction of a Flexible Exchange Rate Mechanism in Nigeria. He also delved into the health of the financial system and discussed the Bank’s detailed examinations of financial institutions as well as its zero tolerance for insider dealings by Board and Management of deposit money banks. In sum, the Governor declared that the Strategic health of Nigeria’s financial system is still strong at this time”.

The CBN governor was also said to have told the Senators that it was frightening that the nation was experiencing economic stagnation at the same time with inflation.

According to the Emefiele, it was not expected that stagnation and inflation would happen at the same time, adding that the economy was gloomy, stagnant and worsening.

By Timothy Enietan-Matthews

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