By Sabiu Abdullahi
Former governor of the Central Bank of Nigeria (CBN), Muhammad Sanusi II, voiced concerns over the inflationary pressures and devaluation of the naira caused by the CBN’s lending to the federal government through Ways and Means during the administration of former President Muhammadu Buhari.
He stated this in a recent statement at MTN Capital Markets Day.
Sanusi highlighted that the central bank had pursued aggressive monetary tightening using various liquidity control instruments, including open market operations, open buyback (OBB), and high T-bill rates.
This, he noted, demonstrated the bank’s commitment to its core mandate of ensuring financial system stability and controlling inflation.
Expressing optimism for the short term, Sanusi acknowledged the recent efforts by the central bank to address the issue.
He pointed out that the central bank had initiated a process of aggressive tightening, evident in the OBB rates approaching appropriate levels in the last few weeks.
While recognizing the central bank’s ability to employ different instruments to mop up excess money, Sanusi emphasized the importance of minimizing costs to both the central bank and the government’s balance sheet.
He noted the necessity of relying more on non-conventional instruments for this purpose.
Sanusi urged understanding from the audience, stating that the effects of new monetary policies take time to manifest.
He expressed confidence in the current measures being undertaken by the central bank, emphasizing the importance of tightening money, addressing backlogs, and funding the market for achieving stability in the financial system.