The state governments who expressed concern over the CBN directive said they were currently finding it very difficult to borrow from the banks and if they borrowed it was at very high interest rates.
Speaking to journalists after the Federation Account Allocation Committee (FAAC) meeting, the Chairman of Finance Commissioners Forum, Timothy Odaah, said the apex bank’s directive was “giving states harsh experience as banks are no longer eager to extend facilities to states without the say-so of the CBN among other negative effectives to the investment desires of the states and the fact that they now have to pay higher interest when they borrow from the money market.
Odaah hinted that the state governors will present their misgivings on the compulsory deposit to President Goodluck Jonathan at the next National Executive Council (NEC) meeting to look for possible ways to bail the states out of economic difficulties.
The CBN, at its Monetary Policy Committee meeting in July, came up with the policy of 50 per cent Cash Reserve Requirement (CRR) on public sector deposits as one of the ways of addressing the heavy liquidity surfeit in the financial sector, which was having negative effects on the stability of the naira.
As at the end of September, the CBN had withdrawn a total of N1.2 trillion, being 50 per cent public sector funds deposited in banks for the months the months of August and September.
Recent data from the Financial Market Dealers Association (FMDA) Economic report for September showed that the CBN withdrew N955 billion from banks as 50 per cent deposits from the public sector and N242.75 billion in September bring to a total of N1.2 trillion in two months.-Leadership
No comments:
Post a Comment