*Forecloses naira devaluation
Going by the projection of the Central Bank of Nigeria (CBN), Nigeria’s foreign reserve, which stands at $27.66 billion may deplete further to $18 billion this year.
Image: Central Bank Governor Godwin Emefiele
This is the result from the “risks posed to government revenues – leakages in the oil sector, reduced production, and drop in prices and the dwindling market for Nigerian crude oil.”
While responding to the recent calls to further devalue the naira, Adebayo Adelabu, CBN deputy governor (corporate affairs), and Suleiman Barau, CBN deputy governor (operations), who defended the 2015 budget performance and 2016 budget defence before the joint Senate and House of Representatives Committee on Banking and Currency, however, noted that “the bank does not envisage devaluation of naira,” and assured of maintaining the $196.97/$1 exchange rate.
Adelabu, who noted that global interest rates were expected to remain low in the first half of 2016, however, expressed optimism that various measures taken by major economies to address the downturn in the global economy were likely to improve returns on investments towards the end of the fiscal year.
Adelabu explained that 70 percent of the CBN annual budget go into currency issuance mandate and monetary policy, and other interventions in critical sectors of the economy including agriculture, power, aviation and SMEs, aimed at stabilising the economy.
Adelabu added that N616 billion revenue was realised from the devaluation of naira in 2014, and that large chunk of the revenue was spent to stabilise the economy through mopping up of liquidity.
On his part, Barau, who explained that commercial banks had about N8 trillion balances domiciled with the apex as of today, stressed the need to organise real sector reform for banks in the bid to improve lending.
In response to the presentations of the CBN representatives, the lawmakers queried the utilisation of the N1.062 trillion revenue realised against the N482.167 billion proposed income for the year 201.
The lawmakers, who alleged that the “CBN is developing a culture of spend as I earn attitude,” argued that its operating surplus that should had accrued to government coffer was about N400 billion.
They also queried the astronomical increase in staff cost from N158.134 billion in 2015 to N408.808 billion, as proposed in 2016 budget, security allowances as well as non-inclusion of commission for brokers, Dutch income, in its budget proposal.
The lawmakers also queried the N780 million spent on dealing room, N226 million spent on recruitment, N1.5 billion spent on research, N75.980 billion loss incurred from SWAP, N.8 billion spent on data collection and about N1 billion spent on Entrepreneurial Development Centre.
To this end, the Committee demanded for the CBN financial statement, nominal roll, details of the foreign and domestic investments, among other contentious issues raised at the meeting.
While ruling, the Committee resolved to hold a special session next week with the CBN management with a view to addressing all the grey areas on its operations and core mandates.
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