ABUJA (Sundiata Post) – CBN Governor Olayemi Cardoso
The governor, Central Bank of Nigeria (CBN), Olayemi Cardoso, has said the country is paying for the consequences of the N27 trillion ways and means loan.
Speaking on Thursday at the BusinessDay CEO Forum, Cardoso said there was excess money supply in the system which worsened inflation and the country is now bearing the brunt.
“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.
On May 23, 2023, the senate approved the N22.7 trillion ways and means loan, thereby securitising the debt following a request made by former President Muhammadu Buhari on December 28, 2022.
The monetary policy committee (MPC) of the CBN had in May, raised interest rates from 24.75 percent to 26.25 percent. Cardoso said the MPC is not oblivious to the fact that the country requires economic growth.
He said the MPC is focused on taming the inflation rate and stabilising the naira and that the monetary policy rate (MPR) is set by the MPC committee composed of independent-minded people — not the CBN governor
“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.
“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.
“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.
Speaking on foreign exchange (FX) volatility, Cardoso said the CBN had to correct some dysfunctions in the system, such as illicit flows, to ensure market stability.
He said that timely communication and market transparency have restored stakeholders’ confidence, adding that there is no more front-loading of FX requests.
“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.
