December 27, 2019/CBN

Adamu, Edward Lametek

The global economy continues to struggle under the combined weight of factors including trade tensions resulting in significant tariff increases between the United States and China; subdued investment and activity prospects in emerging markets and developing economies (EMDES); increasing policy uncertainty across many countries; unstable commodity prices, Brexit uncertainties as well as other geo-political setbacks. These conditions have continued to hurt business sentiment and confidence globally in the second half of the year. After several downward reviews, the International Monetary Fund (IMF) currently projects the world economy to grow at 3.0 percent in 2019-the lowest since the most recent global economic and financial crisis.

At the projected level, growth in 2019 would be significantly lower compared with 2017/2018 for EMDEs and advanced economies. Clearly, the external environment of economic policy continues to deteriorate, and the short- to medium-term outlook remains unclear. Against this backdrop, and given the rather muted inflation path globally, monetary authorities have generally had no hesitations about sustaining, or even, intensifying monetary expansion to boost growth and employment.

Although there may not be as much room to expand money in Nigeria, given the current upward path of inflation, constraining liquidity any further does not, in my view, represent an optimal orientation of monetary policy at this time. I therefore voted to retain all policy parameters at their prior levels at the November 2019 meeting of the Monetary Policy Committee (MPC), while urging the Bank to sustain its targeted and largely catalytic interventions in agriculture and SMEs sectors especially. The data available to the Committee suggested to me that the credit constraint in the economy was alleviating, owing mainly to the Differentiated Cash Reserve Requirement (DCRR) and the minimum loan-to-deposit (LDR) ratio specified by the Bank during the year. Between January and October 2019, gross credit expanded by over one trillion naira (N1.0 trillion); much of the increase actually occurred between June and October 2019. The sectors with the largest increases in credit during the period include agriculture, manufacturing, consumer credit and general commerce. Importantly, both measures (DCRR and LDR) had not resulted in rapid monetary expansion as key monetary aggregates continued to be significantly below their indicative benchmarks. I figured that the immediate risks to price stability were not necessarily emanating from the growth in credit, but more crucially from a variety of structural constraints in the economy, preventing efficient and effective circulation of goods, particularly food. It is expected that the food supply shock, which led to the mild increase in food inflation in October would be short-lived as producers of food are incentivized to ramp up production.

Already from the Q3, 2019 GDP numbers, we could see agriculture quickening, driven by crop production. In addition, the partial border closure offers the economy an opportunity to regain control of food production and prices in the medium-term. It is partly in this connection that I find merit in sustaining the on-going strategic interventions in the agricultural sector by the CBN. It is equally important that governments at the state and local government levels evolve ways to promote agricultural production including incentives and infrastructure to complement those initiatives by the CBN and the Federal Government. As I evaluated the economy’s overall performance in the first eleven (11) months of 2019 and the short- to medium-term outlook, I clearly could see two defining elements – credit to the real sector and the naira exchange rate.

On credit, the Bank has been able to turn around the situation through the LDR and the Global Standing Instruction (GSI) which aims to reduce credit risk. Given that interest rates have started to moderate and banking industry nonperforming loans (NPLs) trending towards the regulatory 5.0 percent level, money market activities could only be expected to buoy in months ahead. Regarding the second element, the naira exchange rate, most analysts agree that its stability has been the central driving force of the current recovery. I also subscribe to this view. I would argue, therefore, that the most important medium-term challenge for monetary policy would be how to preserve the stability of the exchange rate of the naira. I recognize though that some of the associated mechanics like oil price and capital flows are a bit exogenous to domestic policy calibrations. As the outlook for the foreign exchange supply side continues to be uncertain, the Bank must manage the demand side effectively to keep the exchange rate stable. In this regard, the restriction on the use of foreign exchange remains relevant and the list of items-not-valid for funding from the foreign exchange market should, perhaps, be expanded to ease the pressure building on the current account.

Overall, I have considered that the measures currently in place have not lived out their full impact and as such should be allowed some more time to strengthen the recovery process. Meanwhile, the routine sterilisation actions of the Bank should be enough to prevent system liquidity from surging rapidly on account of credit expansion. More importantly, however, the need remains for Government to maintain the focus on diversifying the economic base and growing revenue. It is especially relieving that the process of the 2020 budget has very well advanced which means implementation could begin much earlier than previously experienced. This should accord economic activity and growth recovery the much-needed push in 2020. Based on the foregoing, I 10 found no compelling need to tweak any of the headline instruments of monetary policy at the November 2019 MPC. In effect, I voted to:

• Retain the MPR at 13.5 per cent;

• Retain the asymmetric corridor at +200/-500 basis points around the MPR;

• Retain the CRR at 22.5 per cent; and

• Retain the Liquidity Ratio at 30 per cent.

Adenikinju, Adeola Festus

Economic Developments

Developments in the global economy has not changed radically from the last MPC meeting in September 2019. The global economy provides mixed opportunities and challenges. Rising yield in the US poses challenges for portfolio flows to emerging economies. The outlook for the oil sector is not very bright and remains volatile due to geo-political developments in the Middle East and around the world. Trade war between the US and China and the BREXIT issue continues to impact negatively on global output, global trade, commodity prices, and on the financial markets. Nigeria, like many other emerging and developing economies have not been able to insulate its economy sufficiently from these uncertainties and vulnerabilities.

Global inflation rate is somehow tepid. Most advanced economies continue to implement accommodating monetary policies and allow corporate debts to soar in order to boost their economies. On the other hand, several developing countries are faced with rising public debt. The expected capital flows from advanced economies to emerging economies have also not happened at the quantum and speed previously anticipated. On the domestic front, the results are mixed. Output growth retains its fragile, but positive trajectory in the third quarter of 2019, with a 2.28% growth compared to 1.81% recorded in comparative period in 2018. This makes it the fourth consecutive quarter that real GDP has posted a growth above 2.0%. The growth in GDP was driven mainly by the oil sector. The increase in electricity generation by 4.4% in the third quarter also contributed to the improved performance recorded in the GDP. Headline inflation (year-on-year) rose to 11.61% in October 2019, from 11.22% in September 2019. The foreign reserves level stood at US$39.65 billion by November 21, 2019, compared to US$40.33 billion as at end-September 2019. Moreover, the current account balance also deteriorated between the second and third quarters of 2019.

While, the foreign exchange rate markets remain relatively stable at both the BDC and the I&E windows, the weak performance of the current account balances, fall in foreign reserves and the small margin between oil price and the benchmark price for oil, implies that there could be increasing pressure on the naira in the medium term if the existing conditions subsists. The fiscal space also deteriorated due to rising fiscal deficit. Government revenue underperformed relative to budget, while expenditure rose above the budgeted sum in the first half of the year. The equity market also continues its downward trajectory in the third quarter of the year. All-Share Index (ASI) 12 declined by 14.12% to 16,991.42 index points on November 22, 2019 from 31,430.5 index points at end December 2018. The financial system indicators (FSI) trend was generally positive. The NPLs was particularly encouraging.

NPLs ratio declined from 9.4% in August 2019 to 6.6% in October 2019. It is hoped that the trend will continue. Total operating cost to operating income of banks also declined from 67.4% in August 2019 to 66.9% in October 2019, suggesting more efficiency in their operations. Loans and advances as share of banks’ assets rose by 2 percentage points from 33% to 35% between May and October 2019. Gross credits rose by nearly a trillion naira between October 2018 and October 2019. More sectors of the economy benefitted from the increase in lending, with the manufacturing sector, retail and consumer credits recording the highest increase. Liquidity in the economy remains high, driving down unsecured interbank and OBB rates below the lower band of the MPR corridor of 8.5% – 15.5% between September 23 and November 20, 2019. Patronage at the SLF window declined significantly, while those at the SDF rose appreciably between the period July 22 -September 20, 2019, and the period September 22 to November 20, 2019. Net liquidity position of the economy was lower in October 2019 relative to December 2018.

Reserve Money in October 2019 was 18.72% lower than the benchmark value. Broad money aggregates M3 and M2 performed below their indicative benchmarks in September 2019. Maximum lending rate declined by 0.87 percentage points to 30.56% in October 2019 from 31.43% in September 2019. Similarly, the prime lending rate fell by 0.08 percentage points to 15.07% in October 2019 from 15.15% in September 2019. The balance of trade and current account balances deteriorated in the third quarter of 2019 relative to same period in 2018.

Considerations

Existing policies put in place by the MPC has been yielding results. Credit to the economy is expanding, Lending rates are reducing, albeit marginally and domestic output is growing. Support from the fiscal side to the efforts of the monetary authorities would further boost these positive indicators. However, the economy is facing a number of headwinds, including the new minimum wage, and its effects on Government finances, especially at the states level, challenges pose by the closure of the border, including higher costs of imported food, securities challenges, climate change and poor state of infrastructure.

Bank’s staff forecast that inflation may yet tick up in the last quarter of 2019. The negative output gap and the positive unemployment gap suggest that the economy has the potential to generate non-inflationary output growth by 13 utilizing more of the currently unemployed and underemployed labour force. The absence of any serious fiscal buffer portends increasing borrowing, and even more debts for the Government.

There is no doubt the economy is in a need of an urgent and deep boost if it is to grow at a far more descent rate that will dent the current high unemployment and poverty rates in the country. The Government needs to take bold steps in the following areas: a) Sale of government wasteful assets to improve government financing b) Promote domestic gas utilization and gas-based industries to diversify dependence on oil exports and boost electricity generation c) Alternative funding of Government capital projects, using the private sector funding to reduce pressure on government budget d) Reforming energy subsidies in the oil and electricity subsectors e) Enactment of oil sector reform law

Decision

On the basis of above considerations, I cast my vote to hold the existing monetary policy parameters at this meeting at their existing levels:

• MPR at 13.5%

• CRR at 22.5%

• Liquidity ratio at 30%

• Asymmetric corridor around the MPR at -500/+200 bases points. 14

Ahmad, Aishah N.

The Monetary Policy Committee held its last meeting in 2019 within a subdued global economic environment amidst some domestic optimism. The Committee broadly appraised its existing policies vis a vis global and domestic developments over the year, taking stock of their impact on the price and monetary stability mandate. Undoubtedly, it had been an eventful year. Whilst uncertainties continue to persist, some headwinds are now fully developed and policy makers across many jurisdictions admit to working with increasingly limited toolkits. Thankfully, domestic policies are yielding some positive results, evidenced by a relatively resilient domestic economy with a positive short-to-medium-term outlook, even in the face of rising external vulnerabilities. Thus, I shared members’ broad optimism that the Nigerian economy had a few bright spots expected to manifest into tailwinds as the global economy slows into 2020. Global economic sentiment at end 2019 is decidedly weak. Bank staff reports revealed that 11 out of 14 major central banks reviewed, cut policy rates, and the IMF cut its global growth forecast three times within the year. Bleak economic narratives dominated the annual meetings, all clearly indicating a world bracing itself for a recession. The yet unresolved US-China trade war was disrupting global trade value chains and hurting the Chinese economy – the world’s second largest – whilst unresolved Brexit and approaching general elections in the UK are exacerbating the worrisome situation.

Clearly, global trade uncertainty and geopolitical tensions appear to be the new normal going forward. Notwithstanding, domestic output recovery continues to strengthen and remains on a positive trajectory. Based on Q3 2019 real GDP numbers recently released by the National Bureau of statistics (NBS), the economy grew by 2.28 percent, compared with 2.12 percent in Q3 2018. This improved growth numbers which can be partly attributed to rising domestic credit, exchange rate stability and fiscal stimulus, represents the 10th consecutive positive quarterly growth in GDP since the economy exited a recession in Q2 2017. The trajectory is expected to continue as reflected in staff and IMF 2019 GDP forecasts for Nigeria at 2.2 and 2.3 per cent, respectively and a purchasing managers’ index (PMI) at 58.2 points (October 2019), rising for the 31st consecutive month.

While the domestic economic momentum remains broadly optimistic, global trade headwinds and geopolitical uncertainties mentioned earlier, may have 15 potential negative effects. Crude oil prices have remained dampened on the back of deteriorating growth sentiments with limited signs of any significant price increase in the near term. This has negative implications for our fiscal revenue, inflation, output performance and external reserves. However, the current level of external reserves (US$39.65b as at 21st November, 2019) is sufficient to accommodate over 9 months of imports and ward off medium term threats to price stability as more sustainable economic reforms are being explored. Limited buffers, lower expected revenue in view of lower oil prices and a rising debt profile, constrict the fiscal authority’s ability to stimulate growth. However, the Finance Bill – detailing the planned Value Added Tax increase and other measures – is a positive indication of commitment to fiscal consolidation. As anticipated, headline inflation increased modestly from 11.24 percent in September 2019 to 11.61 percent in October 2019 on account of seasonal endof-year uptick in prices; and partly due to Nigeria’s border closure, which impacted on food supply.

Consequently, food inflation rose from 13.51 percent to 14.09 percent in September and October 2019, respectively. Core inflation, the underlying inflation in the economy, however, declined marginally from 8.94 percent to 8.88 per cent in September and October, respectively. The decline reported in core inflation was attributed to the relative stability in the foreign exchange market. Whilst data provided at the meeting strongly indicated that there were net gains to the economy on the partial border closure – improved local production and access to market, reduced Premium Motor Spirit (PMS) consumption, – a longer term strategy will be critical to preserve the net positive effects. These include a comprehensive review of Nigeria’s trade policies and effective monitoring of the borders to consolidate on the gains recorded so far. Significant investments should also be channeled towards infrastructure development through public private partnerships in view of the constricted fiscal space, while sustaining the ongoing tax reforms.

These measures will help strengthen output expansion, improve job creation, thus making growth more inclusive – an essential ingredient for securing better economic prospects. Financial stability; buoying domestic output growth and lower yield curve – The financial system remains one of the key bright spots of the economy, rising up to its intermediation role albeit with some policy nudging. A major driver of economic activities, it continues to be safe and resilient, maintaining progressively strong soundness indicators across liquidity, capital adequacy and asset quality; a trend which was sustained through the year. NPLs ratio reduced further to a remarkable 6.6 percent as at end October 2019, the lowest in over four years. Other prudential ratios remain within desired levels, while positive domestic GDP growth prospects is expected to further strengthen asset quality, solvency ratios and sustain financial system stability.

The Loan to Deposit Ratio (LDR) policy has continued to be very successful adding N1,060.29 billion in loans to the private sector between end May 2019 and end September 2019 and over N1.6 trillion in new loans to the economy since it was first pronounced in July 2019. Monetary aggregates provided by Bank staff validate the impact of increased lending and reduction in credit to government and clearly show growth in consumer credit. Significant portions of the new credit went to manufacturing (N459.69 billion), the highest in two decades, consumer loans (N356.65 billion), General Commerce (N142.98 billion), Information and Communications (N82.07 billion), Construction (N74.52 billion), Agriculture, Forestry and Fishing (N73.20 billion), Mining and Quarrying (N3.64 billion) and Transportation and Storage (N3.09 billion), amongst others.

In addition to credit to the private sector, which has helped spur growth in Q3 2019, the LDR policy created a number of other positive effects. Renewed focus on lending by banks has created competitive pressure, which is driving a reduction in market lending rates, enhancing affordability and creating demand for loans. The new credit has been primarily in manufacturing, agriculture and consumer lending which is helping to diversify bank credit portfolios which have hitherto been heavily concentrated in Oil and Gas. Contribution of Oil and Gas reduced to 27.4 per cent of total loans and manufacturing grew to 16.0 percent (end October 2019) from 30.41 and 14.68 per cent respectively (end December 2018). The reduction in credit to Oil and Gas and FGN Payments of outstanding obligations in this sector is also helping to reduce risk, as the sector NPLs reduced from 20.76 to 5.39 per cent of industry NPLs from end October 2018 to end October 2019. Other complementary policy measures such as the Global Standing Instruction (GSI) to address willful default by serial borrowers in the banking system, Differentiated Cash Reserve Ratio (DCRR), Development Finance Initiatives in agriculture, micro, small and medium enterprises (MSMEs) are expected to further strengthen the credit drive. The recent policy measure limiting participation in the OMO bill market to banks and foreign portfolio investors is expected to have a positive impact on both the fixed income and equities markets, creating supply of long term equity capital from domestic and foreign investors seeking improved yields, given the reduction in yield and supply of treasury products.

Summary and Policy Decision

2019 ends with the Nigerian economy having “held its own” in the face of growing headwinds and uncertainties in the international monetary and financial system. Oil prices have been choppy through the year, averaging around US$60 per barrel and external reserves have seen some net reduction on the back of uncertainty in the global economy. However, on balance, the economy has weathered the storm.

Growth has continued to be positive and rising fueled by increased lending to the manufacturing, agriculture, and consumer goods sectors, and progressively lower interest rates. Inflation has risen slightly and remains critical to watch but, continues to be driven primarily by temporary supply-side factors to be resolved by an expected bumper harvest, counterbalanced with positive impact on domestic production in some sectors due to the temporary border closure.

Positive impact from the monetary policy measures is expected to be sustained as credit growth, domestic production and aggregate demand continues to rise. This must be complemented by fiscal initiatives aimed at improving the investment climate to attract foreign direct investment to keep Nigeria globally competitive.

Price and monetary stability continue to be maintained at the current policy rate, and thus there appears to be no immediate reason to change course. Therefore, I vote to retain the current monetary policy stance, by keeping MPR at 13.5%; Cash Reserve Ratio at 22.5%; Liquidity Ratio at 30% and Asymmetric corridor at +200 and -500 basis points around the MPR.

Asogwa, Robert Chikwendu

Background

The period preceding the November 2019 Monetary Policy Committee meeting was characterised by a mix of macroeconomic events driven by multiple, but interrelated factors at both the domestic and global levels. These events have particularly shaped the configuration of thoughts on expected monetary policy choices at this meeting. On the domestic side, there are concerns with the re-emergence of marginal upticks in monthly inflation rates at a time when the GDP growth is picking up and a gradual output recovery is projected to continue in the 2020-2021 period. On the global level, the persistence of economic uncertainty that has kept growth subdued for a long period amidst muted inflation in many countries is taking an increasing toll on investment confidence. The possibility of further escalation of trade tension or a disorderly Brexit now casts an obstructed 2020 outlook for monetary policy for all developing and emerging economies, and the policy responses in many countries have been similar, focused more on scaling back in monetary easing. The policy options at this MPC meeting should therefore seek to balance the weights of risks between the global economic uncertainties and the changing domestic economic conditions. While monitoring closely the responses of global policy makers to Brexit developments and the prospects for faster recovery in global growth, it is also important to invest in measures that enhance the prospects of sustainable medium term growth for the domestic economy.

The Global Economic Outlook

Over the past two months, the global growth outlook has again been revised slightly lower and the risks remain titled to the downside. The key source of uncertainty for the external environment remains the same as in the last MPC meeting. The signs of economic slowdown intensified even with weakening inflation. The US-China trade disputes continue to affect international trade flows and investment as many firms step up the scaling back of spending. The projected global growth of 3.0 percent in 2019 appears to be the weakest in the past decade and except for countries in sub-Sahara Africa, per capita growth for 2019 is expected to be the lowest in over two decades. For the US, output growth looks strong, but shows a slower pace of expansion in the first three quarters of 2019. The growth slowdown has been pronounced in other major economies including the UK, the Euro Area as well as in such emerging economies as China, Hong Kong, Mexico and Russia. CBN staff report suggests that UK’s 2019 third quarter growth is perhaps its weakest growth figure in a long time.

GDP growth in the Euro Area has also remained subdued in the third 19 quarter of 2019 especially as Germany and Italy record poor growth despite the marginal growth upticks in France and Spain. GDP growth in China is expected to moderate further in 2019 and 2020 as escalating trade tension weigh in on investment and fuels even more uncertainty. Output trend in Brazil and India in contrast to other emerging markets appears to be improving and largely underpinned by some modest acceleration in private consumption expenditures. While global output expansion weakened, core inflation remained muted and below target ranges in many advanced economies, often as an aftermath of the weakening aggregate demand and subdued wage growth. In many emerging and developing economies, inflation rates also moderated, sometimes below historical levels except in few cases like Argentina where the large currency depreciations found its way to higher prices or in Venezuela where there were acute shortages of food and other essential items which has generated increases in prices.

The risks of economic slowdown and the prevailing low inflation rates prompted may central banks in the advanced economies to either ease monetary policy or communicate their readiness to act in such a direction. The US Federal Reserve lowered policy rates cumulatively by 75 basis points and in three successive sessions in 2019. More recently, the Federal Reserve also resumed purchases of treasury bills, which it plans to continue into the second quarter of 2020. The European Central Bank also in November 2019 introduced a new and indefinite monthly asset purchase programme despite maintaining policy rates at same levels, while the Bank of England in early November 2019, agreed to maintain policy rates as before, whilst strengthening the level of bond purchases from central bank reserves. With this drop in global borrowing costs, some emerging markets and developing economies benefited from the global liquidity flows, while some others suffered from flight to safety issues. These outflows from emerging markets came largely from the weakening equity markets and in Sub-Sahara Africa particularly, sovereign bond issuance activity has been relatively subdued compared to the levels in 2018 and 2017.

The Domestic Economic Outlook

The outlook for the Nigerian economy is a little changed from the position from two months ago which was the last MPC meeting for 2019. After a soft patch in Q2 GDP growth, which declined to 1.94 percent in Q2 2019 from the Q1 2019 GDP growth of 2.10 % (revised from 2.01% due to oil output revisions), a subtle turning point appears to have started in Q3 2019 as the GDP growth moved 20 upwards to 2.3 percent. The central scenario remains that the Nigerian economy will on average grow by 2.3 percent in 2019, but then the growth rate will pick up to about 2.9 percent in 2020, and further to 3.3 percent in 2021. Generally, the oil sector performance was again impressive, growing from 5.15 percent in Q2 2019 to 6.49 percent in Q3 2019, while the non-oil sector which grew by 1.64 percent in Q2 2019 also improved to 1.85 percent in Q3 2019. The expansion in both the manufacturing and non-manufacturing PMI from 57.7 and 58.0 index points, respectively in September 2019 to 58.2 and 58.2 index points in October 2019 also show a brighter outlook for investment and consumption expenditure expected to support future growth. The recent inflation data for October 2019 just released before this MPC meeting were generally as expected with headline inflation increasing to 11.61 percent from 11.24 percent in September 2019. The expectation of a marginal uptick is in response to the temporary effects of the border closure on such commodities as rice and poultry products. CBN staff projection is that inflation may increase further in the remaining months of 2019 (expected at 11.87 percent at end December 2019) and probably commence a modest decline in early 2020. The outlook for oil prices continues to be an important source of uncertainty from the external environment as negative developments could further harm exchange rate stability and hence pass through to inflation. Gross external reserves as at October 31, 2019 declined by 2.69 percent compared to the levels at the end of September 2019 and there are projections of further declines by end of December 2019. The banking stability indicators have shown some further signs of a turnaround after the last MPC meeting. The non-performing loans ratio dropped dramatically from 9.4 percent in August 2019 to 6.6 percent in October 2019 which is now very close to the regulatory benchmark of a 5 percent maximum. This has somewhat increased the confidence in the banking system despite the October 2019 marginal drop in the capital adequacy ratio to 15.3 percent from the August 2019 level of 15.8 percent. The growth in total assets by October 2019 when compared to earlier months and largely driven by growth in credit is quite remarkable as it also suggests that credit conditions especially for small and medium enterprises have responded to new Central Bank regulatory policies especially the loan to deposit ratio and the sector targeted quantitative easing measures. The wide expectations on the part of the fiscal authorities in Nigeria to minimize distortions created by the current fiscal stance through revised policy options remain unfulfilled. In previous MPC meetings, the concerns over increasing public indebtedness have been extensively expressed. Even though Nigeria 21 remains characterised at the “moderate risk level” in terms of the debt distress situation, the increased reliance on external debt remains a potential source of vulnerability and pose severe risks to future growth. A coherent fiscal consolidation strategy that complements and enhances the effectiveness of monetary policy remains a strong option.

My Decision

The fragile global outlook has pushed a number of central banks around the world to ease monetary policy in response to declining inflation rates and the growth downside risks, which appears to have persisted for a long period. The expectations of further monetary easing in these key advanced economies is now low, but still uncertain. While Nigeria’s Q3 output show some modest improvements in the economy, but in the face of such new challenges as the latest marginal inflation upticks and a slowdown in the overall level of the country’s external reserves, a balance of future expectations is key for the choice of monetary policy stance. Taking together, it is reasonable to maintain status quo, while the committee continues to monitor developments and also remain prepared to adjust monetary policy in future if required so as to support overall growth in economy, whilst keeping on track the targeted inflation band.

My opinion therefore, is that policy parameters should remain largely unchanged at this November 2019 MPC meeting. I will thus vote to:

• Retain the MPR at 13.5 %

• Retain the CRR at 22.5%

• Retain the Asymmetric Corridor at +200/-500 basis points

• Retain the Liquidity Ratio at 30.0%.