Nigeria's foreign reserve drops to $43b

• Source: Xinhua
• [09:19 July 09 2009]
• Comments

The Central Bank of Nigeria (CBN) has said the outlook on the economy for the year is still uncertain, with the country's foreign reserve dropping to 43 billion USdollars in July, the News Agency of Nigeria reported Wednesday.

Lamido Sanusi, the governor of CBN, stated this Tuesday in Abuja after the 64th Monetary Policy Committee (MPC) meeting, adding that the state of the economy for the second half of the year remains unpredictable.

He said the current global financial crisis has weakened growth considerably in the first quarter to 4.85 from 5.75 percent, noting that the country's reserve, which peaked at 67 billion dollars in July 2008, has dropped to 54 billion dollars by December.

According to him, there is currently near total absence of debt instruments in the capital market, as a result of which banks are responsible for almost 100 percent of the loans taken by the private sector.

He promised that the CBN would work with the tax authorities to have a tax free yield curve and encourage the development of a bond market.

Sanusi said the CBN would also collaborate with the Securities and Exchange Commission (SEC) as well as the Nigeria Stock Exchange (NSE) to reduce the cost of bond issues, so as to diversify funding sources away from banks.

According to him, the Monetary Policy Rate was reduced by 175 basic points in April 2009, while the liquidity and cash ratios declined from 30 percent and 2 percent to 25 percent and 1 percent respectively.

The CBN governor said all the actions seem not to have yielded the desired results, adding that banks would be encouraged to share the cost of infrastructure, and be more innovative in cutting down the cost of doing business.