LAGOS – The Central Bank of Nigeria (CBN) and the Federal Ministry of Finance have been urged to collaborate to ensure price and exchange rate stability in the country.
Mr Kyari Bukar, the Managing Director of the Central Securities Clearing System (CSCS), made the call in an interview with the News Agency of Nigeria (NAN) on Wednesday in Lagos.
Bukar said that the two agencies needed to collaborate to achieve their objectives of stabilising the economy.
He said that the two institutions should be ready to check the likely effects of high spending that could arise from electioneering period, which he said, was customary in a democratic dispensation.
Bukar said that high spendings could trigger imbalance in the economy, stresssing that ”when you spend, you open up a kind of war because there will be more money in the system”.
He said that it was because of this that the CBN and the Monetary Policy Committee (MPC) raised the Cash Reserve Ratio (CRR) from 12 per cent to 15 per cent in March.
Bukar said the purpose of the increase in CRR was to mop up money from the system.
According to him, the decision will have made the CBN to withdraw between N350 billion or N400 billion from circulation.
Bukar said that the decision tightened liquidity in the system, making it difficult for Nigerians and institutions to use such funds on other things.
He said that the withdrawal would lessen the pressure on the naira.
”There is spending galore that is coming into the system.
” So, the MPC had to quickly take a watchful eye on the price rate and exchange rate,” he said. (NAN)