“CBN Governor Olayemi Cardoso has highlighted the impact of past government borrowing on Nigeria’s current inflation crisis, attributing the rising inflation and interest rates to N27 trillion in advances and N10 trillion interventions.”
The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has attributed the country’s current economic woes to excessive borrowing by the previous government. He pointed specifically to the N27 trillion Ways and Means advances and N10 trillion intervention programs, which he claims have led to soaring inflation and high interest rates.
Cardoso made these remarks during a CEO Forum held in Lagos on Thursday. He explained that Nigeria’s high interest rate, which was at 26.25 percent in May, is largely due to the increased money supply and subsequent inflation. This situation has forced the Monetary Policy Committee (MPC) to maintain elevated interest rates to manage the inflationary pressures.
He distanced himself from the MPC’s decision to tighten monetary policy, emphasizing that the committee operates independently and bases its decisions on data rather than emotions.
“Nigerians must understand that the surge in Ways and Means and intervention programs has consequences,” Cardoso stated. He further clarified that the MPC’s primary mandate is to reduce inflation, and its decisions reflect current data trends.
“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,” Cardoso explained. “Thankfully, we have a monetary policy committee comprised of independent-minded people who are solely driven by data.”
“The MPC has made it very clear that their major issue is taming inflation and they will do whatever is necessary to achieve that. Sadly, we have a situation where a lot of money supply went into the system. We all saw Ways and Means soared to N27 trillion. We saw interventions of N10.5 trillion. It has its consequences. In large respect, that is what we are paying for now,” Cardoso added.
Under the tenure of former CBN Governor Godwin Emefiele, Nigeria’s borrowing from the apex bank skyrocketed to N27 trillion. The Debt Management Office (DMO) recently attributed the surge in Nigeria’s debt to N121 trillion at the end of Q1 2024 to the scrutiny of N4.90 trillion Ways and Means loan and foreign exchange differences.
Cardoso’s statements highlight the ongoing challenges facing Nigeria’s economy, emphasizing the long-term impacts of fiscal and monetary policies on inflation and interest rates.
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