CBN Raises Price Verification System Limit to 15% to Combat Global Inflation

In a bid to address the challenges posed by global inflation, the Central Bank of Nigeria (CBN) has announced a significant adjustment to the Price Verification System (PVS), increasing the limit from 2.5% to 15%. This move, outlined in a circular by Dr. Hassan Mahmud, Director of the Trade and Exchange Department, aims to mitigate the impact of inflationary pressures on the Nigerian economy.

Originally introduced in 2022 to curb over-invoicing of imports, the PVS now takes on added significance in the face of escalating global inflation. The system ensures that prices of imported items remain within acceptable parameters, with deviations beyond 15% of global average prices subject to scrutiny.

Mahmud emphasized that while the PVS serves to regulate financial transactions and documentation in the banking sector, it does not determine tariffs or duties charged by the government. Instead, its primary objective is to prevent excessive outflows of foreign exchange through over-invoicing and price manipulation activities.

In addition to the adjustment in the PVS limit, the CBN issued directives regarding the payment of Personal Travel Allowance (PTA) and Business Travel Allowance (BTA). Henceforth, authorized dealer banks are mandated to process PTA/BTA payments exclusively through electronic channels, discontinuing cash payments entirely. This measure aligns with the CBN’s commitment to transparency and stability in the foreign exchange market, aiming to curb malpractices and ensure efficient utilization of forex resources.

These developments underscore the CBN’s proactive approach to managing economic challenges, particularly amidst the backdrop of global inflationary pressures. By implementing measures to regulate trade and financial transactions, the CBN seeks to safeguard Nigeria’s economy against adverse external factors while promoting transparency and efficiency in forex transactions.