RE: ||NaijaObserver|| Nigeria Central Bank Urges "Don't Panic" As Banks Halt Lending To Each Other
John Ebohon
His Imperial Majesty,
Well, those who are carried away by emotions, being the ones that will first accuse you of ‘atavistic this and that ‘, can now see some of the things we saw would happen with this silly policy. They were rather carried away by sheer headlines and sensationalism, even though many of these people are those expected to know better. Even toxicologists and carpenters became economic gurus offering their half-baked opinions and advise.
Thanks Ojare!
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Sent: 31 August 2016 22:10
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Subject: Re: ||NaijaObserver|| Nigeria Central Bank Urges "Don't Panic" As Banks Halt Lending To Each Other
Dr John Ebohon,
Kindly see below our comments of last year on the TSA .
As predicted, TSA impacted negatively on the overall performance of the economy and I once recommended that it should be modified in a way that
the idle funds would yield good returns to the federation account instead of lying fallow in the current account of the Consolidated Revenue of the Federation held at the CBN.
Modified TSA would also lead to an increase in liquidity in the banking
system and reduce the "red tape " or official bureaucracy required
before the funds is released to the MDA and contractors from the
office of the accountant general of the federation .
Sent from my iPhone
On 18 Sep 2015, at 2:11 PM, Imperial <imperi...@yahoo.com> wrote:
We need to maintain some balancing in order for the Treasury Single Account policy to succeed so as not to impact on the overall wellbeing of the economy. As I have said several times, the CBN doesn't have the capacity and capability to run commercial banking activities for the federal government hence I recommended Modified Treasury Single Account .
Sent from my iPad
On Sep 18, 2015, at 13:09, John Ebohon ebo...@dmu.ac.uk [NaijaObserver] <Na ijaOb...@yahoogroups.com> wrote:
This is a serious issue that needs to be resolved urgently. This is what happens in a policy vacuum, where banks do no longer trust one another to repay overnight loans. If Nigerian Banks refuse to lend to each other, how do they expect international finance houses and multilateral and unilateral lending agencies to respond to borrowing requests? This will further squeezed the liquidity problems occasioned by the decision for all government parastatals to move their funds away from commercial Banks to CBN.
OJ
From: NaijaO...@yahoogroups.com [mailto:NaijaO...@yahoogroups.com]
Sent: 18 September 2015 12:31
To: Naijao...@yahoogroups.com
Subject: ||NaijaObserver|| Nigeria Central Bank Urges "Don't Panic" As Banks Halt Lending To Each Other
Nigeria Central Bank Urges "Don't Panic" As Banks Halt Lending To Each Other
When the head of the central bank utters the two words "don't panic" you know the economy, currency, and financial system is in trouble...and that's just what Nigerian central bank Governor Godwin Emefiele just did. Following government intervention to sweep cash from local to central accounts, banks have panicced. As Reuters reports, overnight interbank lending rates spiked to 200%, which Emefiele opined was "a momentary action... just sentiment," but the interbank naira market was paralyzed for a third day on Thursday, with banks unwilling to lend to each other, even when rates fell back to 20-30%.
O/N rates spiking...
And CDS imply a notable devaluation is looming...
Charts: Bloomberg
As Reuters reports, Nigerian central bank Governor Godwin Emefiele ruled out a naira devaluation on Thursday and told people not to panic about a government order which risks draining billions of dollars from the financial system.
In an interview with Reuters, Emefiele said he was ready to inject liquidity if needed into the interbank market, which dried up this week following the directive to government departments to move their funds from commercial banks into a "Treasury Single Account" (TSA) at the central bank.
The policy is part of new President Muhammadu Buhari's drive to fight corruption, but analysts say it could suck up as much as 10 percent of banking sector deposits in Africa's biggest economy - playing havoc with banks' liquidity ratios.
With global oil prices tumbling, banks and companies are already struggling with the consequences of a dive in Nigeria's energy revenues that has hit the naira currency and triggered flows of capital out of the country.
Then JP Morgan kicked Nigeria out of its influential Emerging Markets Bond Index last week due to restrictions that the central bank imposed on the currency market to support the naira and preserve its foreign exchange reserves.
Since taking office in May, Buhari has vowed to rein in Nigeria's dependency on oil exports which account for 90 percent of foreign currency earnings. However, he has faced criticism from investors for failing to appoint a cabinet yet or outline concrete policies.
Amid confusion over the implementation of the single account policy, overnight interbank lending rates spiked to 200 percent, but Emefiele denied the policy had provoked a liquidity crisis.
"There is no shortage of liquidity," he said, pointing to an oversubscribed sale of treasury bills on Wednesday. "A spike is a momentary action. It's sentiment."
"I do not think there is any need for anybody to panic," he added.
Nevertheless, the interbank naira market was paralyzed for a third day on Thursday, with banks unwilling to lend to each other, even when rates fell back to 20-30 percent.
In a sign of the financial ructions, commercial bank cash balances with the central bank that are normally earmarked for foreign exchange or bond purchases plunged to 173 billion naira on Thursday from 486 billion two days ago.
Analysts had predicted that the TSA edict could suck 1.2 trillion naira ($6 billion) out of the commercial banking system. Emefiele said the amount would be less than one trillion, although he did not give details beyond saying the measure was designed to root out graft.
His comments did not instill confidence in the new rules among economists.
"It's an example of the government deciding on a policy without thinking through the mechanics of how its implementation will work," said Alan Cameron at Exotix, a London-based specialist in frontier markets - a higher risk subset of emerging economies.
Average:
Source:
New York Times
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PRESS RELEASE
RIVERS APC HAILS BUHARI, AMAECHI FOR RAIL REVOLUTION •Urges continued faith in Buhari Administration
The Rivers State Chapter of the All Progressives Congress (APC) has hailed the revolution in the rail sector engendered by the Muhammadu Buhari Administration through the Ministry of Transportation ably led by Rt. Hon. Chibuike Rotimi Amaechi. The party in a statement signed by the State Chairman, Dr. Davies Ibiamu Ikanya, expressed the hope that the Administration would in time fully revive and reposition the transportation sector as well as the entire Nigerian economy.
The commendation came ahead of the signing, on Thursday by the Federal Government, of contracts for the Port Harcourt – Calabar coastal rail line project expected to be completed in 2018 and the impending signing of contracts for the Kano – Kaduna railway project before the end of the week.
“We heartily congratulate the Muhammadu Buhari Administration for this revolution which it is executing through the Ministry of Transportation headed by our Leader, Rt. Hon. Chibuike Rotimi Amaechi. We are convinced that this is just the beginning of greater things to come from the Ministry and the Buhari Administration,” Rivers APC said in the statement issued on Thursday in Port Harcourt.
It noted that the Kaduna – Abuja railway earlier commissioned by the Buhari Administration has already created 700 jobs, while the Lagos – Ibadan railway project will start before the end of the year, and will be completed in two years time. “If this is not revolution then we will like to know what revolution is. Truly, we have moved away from the PDP corruption economy to production economy,” the party said.
Rivers APC expressed happiness that Amaechi has taken his revolutionary trends to the national level and reassured Nigerians that they will witness greater feats before the end of the Buhari Administration. “The feats of Amaechi in Rivers State speak volumes and we are happy that he has not disappointed us and the entire country. We congratulate President Buhari not only for his faith in Amaechi but also for given him the conducive environment to operate and achieve all these feats,” the party said.
It also congratulated Nigerians on the discovery of high grade nickel in Kaduna State, describing it as “a major discovery for the Ministry of Solid Minerals, which is also planning to start the production of iron ore, lead, zinc, bitumen, coal, and gold in the next two to five years. The diversification effort is already gathering pace.”
Rivers APC urged Nigerians to continue to have faith in APC and President Buhari to turn around the fortunes of our country and not to be not be overwhelmed by the present economic challenges, which the party described as temporary.
Long Live APC!
Long Live Rivers State!!
Long Live Federal Republic of Nigeria
Long Live President Muhammadu Buhari
Chief Eze Chukwuemeka Eze,
SSA Media and Public Affairs to the State Chairman, APC Rivers State. 08038199163
01-09-16
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