Nigerian citizens are currently dealing with the consequences of an excess money supply of 37.5 trillion Naira that has been injected into the economy, according to Cardoso.
The Governor of the Central Bank of Nigeria, Dr. Olayemi Cardoso, has stated that the current economic challenges faced by Nigerians are a direct result of excessive money supply into the economy.
He specifically cited the N27 trillion Ways and Means loan
and the N10.5 trillion interventions implemented by the previous administration
as contributing factors to the current situation.
He said, “Interest rate is not set by the governor of the
Central Bank. The interest rate is set by the members of the monetary policy
committee. Thankfully, we have a
monetary policy committee composed of independent-minded people who are solely
driven by data.
“The MPC has made it very clear that for them the major
issue is taming inflation and has also made it very clear that they will do
whatever is necessary to tame inflation.
Sadly, we have a situation where a lot of money supply went into the
system. We all saw Ways and Means soar to N27tn. We saw interventions of
N10.5tn. It has its consequences. In large respect, that is what we are paying
for now.”
Ways and Means refers to the temporary financial assistance
provided by the Central Bank of Nigeria to the Federal Government. This
assistance is intended to supplement the government’s spending needs until such
time as revenue is generated.
It Is worth noting that the Central Bank of Nigeria (CBN)
Governor has repeatedly expressed concerns regarding the impact of the ways and
means as well as the intervention funds.
At the conclusion of the initial MPC meeting held this year,
Cardoso stated, “The interventions that took place in the recent past were
estimated in excess of N10tn. I am not talking about ways and means; I am
talking about the interventions. What was the budget of the Federal Government
of Nigeria? What was the budget of the largest state in Nigeria? Do the math,
and it will tell you the extent of damage.”
The Central Bank of Nigeria (CBN) Governor has recently
announced the suspension of intervention programs. The CBN will now focus on
its primary mandate of maintaining price stability and adopting conventional
measures to achieve this objective.
Additionally, Cardoso stated that the central bank would
cease providing Ways and Means advances to the President until the outstanding
loans are repaid in full.
During the prior administration, the then-CBN governor,
Godwin Emefiele, allegedly printed the sum of N22.7tn for former President
Muhammadu Buhari under Ways and Means without the approval of the National
Assembly.
Regarding the interest rate increases, Cardoso stated that
the MPC’s decisions were intended to stabilize the economy.
“If these hikes were not done when they were done, if you
recall naira to the dollar was almost tipping over. This helped to stabilise
things. It’s a timing issue,” he added.
At the most recent Monetary Policy Committee (MPC) meeting,
the interest rate was raised by 150 basis points, bringing it to 26.25 percent.
Financial experts anticipate a further increase in the interest rate, albeit at
a more gradual pace.