According to the monetary committee report of the Central Bank of Nigeria, it has been revealed that, the Apex debited N216 billion from banks’ deposits in June.
Prof. Adenikinju, a member of the MPC, disclosed the development in his personal report at committee meeting and said the deducted funds were statutory Cash Reserve Ratio (CRR).
The CRR is a portion of banks’ deposits kept with the CBN for liquidity management.
The report additionally mentioned that financial soundness indicators continue to reflect positivity, affirming the enduring strength, stability, and resilience of the banking system.
“The capital adequacy ratio (CAR), declined to 11.2 per cent in June 2023 from 13.0 per cent in May 2023, though still within the prudential requirement of between 10 per cent to 15 per cent.
“Non-performing loans (NPL), ratio declined from 4.5 per cent in May 2023 to 4.1 per cent in April 2023. Liquidity ratio (LR), rose to 48.4 per cent in June 2023, from 44.5 per cent in May 2023. This is above the minimum 30 per cent recommended by the prudential requirement”.
He said: “Major sources of net liquidity increase into the economy in June 2023 were Net Cash Reserve Ratio (CRR) debit (N216.32 billion), FAAC N633.46 billion, and SWAP Transaction (N763.32 billion)”.
He explained that interest rate spread month-on-month widened to 23.15 per cent in June 2023.
“On average, maximum lending and average savings rose between May and June 2023. The average Open Buy Back (OBB), rate month-on-month declined to 9.12 per cent in June 2023 from 12.6 per cent in May 2023,” he said.
He listed other major developments in the financial markets as lower Treasury Bills rates at the primary auction, higher recourse to Standing Deposit Facility than Standing Lending Facility and increased OBB transactions.
The external account recorded an overall balance of payments deficit position of US$1.62 billion in 2023 while the services sector deficit narrowed by 3.9 per cent to US$3.01 billion.
“Service payments for the transport, insurance & Pensions and Telecommunication sector fell in the review period. The primary income deficit narrowed by 18.7 per cent to US$2.69 billion due to a rise in repatriation of dividends, by 12.1 per cent,” he said.
As of July 20, 2023, he reported that the Gross External Reserves were at US$33.97 billion, with an end-June 2023 gross external reserves position that could cover 10.68 months of imports.
“The Federal Government’s retained revenue stood at N1,673.15 billion, lower than the pro-rata target of N1,968.12 billion. This was due to the underperformance of FAAC receipts, Gross independent revenue,” he said.
“In the same vein, total FGN Expenditure as of May 2023, was N4.7 trillion , 27.8 lower than the budget estimate of N6.6 trillion. The shortfall came mainly from allocation for debt service, interest on Ways and Means, and capital expenditure,” he said.
“Overall budget deficit reduced by -18.15 per cent in the first five months of 2023. The underperformance of the budget is especially felt in the capital expenditures, thus impacting negatively on economic development”.
