Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), says the country is paying for the consequences of the N27 trillion ways and means loan.
On May 23, 2023, the senate approved the N22.7 trillion ways
and means loan, thereby securitising the debt following a request by former
President Muhammadu Buhari on December 28, 2022, asking the lawmakers to do so.
Speaking on Thursday at the BusinessDay CEO Forum, Cardoso
said there was also a situation where money supply into the system was a lot.
He said the country is now bearing the burden of the loan.
“We all saw ways and means soar to N27 trillion and
interventions went to N10.5 trillion. It has its consequences. In a large
respect, that’s what we’re paying for now,” he said.
INTEREST RATE HIKE
According to the CBN governor, the MPC is not oblivious to
the fact that the country requires economic growth.
“If these hikes were not done when they were done, if you
recall naira to dollar was almost tipping over. This helped to stabilise
things. It’s a timing issue,” he said.
“This is not something that I expect will remain with us
forever. Fiscal issues being moderated and the ability to soak up the excess
liquidity in the system and be able to balance things out over a period of
time. That is important for the MPC.”
He said the MPC is focused on taming the inflation rate and
stabilising the naira.
Cardoso said the monetary policy rate (MPR) is set by the
MPC committee composed of independent-minded people — not the CBN governor.
“These are people not given to emotion but to data. The MPC
clarified that the major issue is taming inflation, and they would do what is
necessary to tame it,” he said.
Nigeria’s inflation rate is 33.95 percent, buoyed by surging
food prices and high energy costs.
Speaking on the issue of foreign exchange (FX) volatility,
Cardoso said the bank had to correct some dysfunctions in the financial system,
such as illicit flows and those who did not abide by the rules, to ensure
market stability.
“Sometimes, there’s
pushback from those who want to continue doing things a certain way. There’s
also that need to show people that there will be consistency in our ways before
the market will settle,” he said.
The CBN governor noted that timely communication and market
transparency have restored stakeholders’ confidence, adding that there is no
more front-loading of FX requests.
“Even with portfolio investors, we found a good number of
them came in, left and came in again,” Cardoso said.
“They were pretty comfortable that there was a plan and that
the plan was headed in a direction that they could see, they understood and
they trusted.
Cardoso said a lot of the wide swings witnessed in the
foreign exchange market “are gradually beginning to smooth out as a result of a
better understanding of the market, better transparency, and the comfort that
those who are using the market see in it”.
Advertise on NigerianEye.com to reach thousands of our daily users
No comments
Post a Comment
Kindly drop a comment below.
(Comments are moderated. Clean comments will be approved immediately)
Advert Enquires - Reach out to us at NigerianEye@gmail.com