Sarah Alade Quotes

A number of fiscal and monetary policy options have been deployed to end the recession and the efforts are yielding fruits as the recently released inflation figure shows that inflation is trending down after 15 months stretch of rising price level. The CBN is also working to increase supply of foreign exchange and boost liquidity in the interbank market to ease the scarcity of foreign exchange for the manufacture of goods and increase the level of production. On the part of the fiscal authority, efforts at broadening the revenue base and increasing the collection of taxes have been intensified and are yielding fruits.

In recent years, academics and policymakers have shown increasing interest in the independence of central banks with respect to the formulation of monetary policy. In the European Union, this interest was realized in the Maastricht Treaty, which gave the European Central Bank complete autonomy in conducting the monetary policy without political intrusion. Most empirical studies support central banks’ autonomy in the conduct of day-to-day monetary policy operations devoid of political pressure. This enables them to deliver better inflation outcomes, without compromising economic growth. The CBN Act of 2007 bestows independency on the Bank.

I think for me, that was a low point. The credibility for this institution was eroded. For an institution this important to be subjected to that is bad. At the end of the day, it was not just the CBN that suffered for it, but the economy as a whole did suffer.

Taking these factors together, the effect on the Nigerian economy has been the significant decline in the country’s foreign reserves, depreciation of the Naira and substantial increase in consumer prices. To reverse the trend and put the economy back on a path to economic recovery, significant effort is needed on the part of the Federal Government, especially harmonization of its fiscal and monetary policies to boost aggregate demand and investor confidence.

Key global trends such as Brexit, the rising wave of populist and anti-globalization sentiments anchored by emerging bilateralism, divergent monetary policy stance of the advanced central banks and disorderly commodity price movements will also affect monetary policy at home. These global developments coupled with domestic factors will make monetary policy management very difficult this year. Based on these, monetary policy management in Nigeria must be diligent and collaborative to achieve its objectives of price stability in the home front.

The best way to ensure the desired economic growth and low inflation is economic diversification with a broadening of the revenue base. Reducing the import dependency will also help to curb the demand for dollar; thereby reducing general inflationary pressure.

The threat to CBN autonomy is also disturbing. Global best practice prescribes central banks’ independence to enhance policy coherence and sturdiness born out of freedom of vision and implementation space.

The inflationary pressure could be traced largely to structural factors, which included poor electricity supply, high cost of energy arising from scarcity of petroleum products, increase in the prices of imported food, raw materials and finished goods, seasonal factors, increase in electricity tariff, insurgency and insecurity in the North East, as well as pipeline vandalism by the Niger Delta militants. However, some monetary factors included exchange rate depreciation, and budget deficits in the face of dwindling oil revenues.

It is also expected that the fiscal authorities would provide direction and leadership while the monetary authorities would facilitate an enabling business environment conducive for growth. Nonetheless, the overriding mandate of the Bank continues to be price stability across the major price rates: inflation; loan interest; and foreign exchange. Stability in prices is essential for investment and consumption. Monetary policy can help through influencing short-term interest rate, but monetary policy alone is not enough to pull the country out of recession. Fiscal policy must come in and do its part to fully pull the economy out of recession.

Nigeria needs to deepen its financial sector as a whole. Deepening the financial sector entails improving financial structures to ensure efficient delivery of financial services to the private sector.

Then, there is the issue of monetary and fiscal policy coordination. Non- harmonization of monetary and fiscal policies is an issue of serious concern in the country because they complement each other. Monetary policy has a limit and whenever it reaches that limit, the only way out is for the fiscal authorities to intervene in the economy. So, in the absence of such coordination/harmonization between the two, a serious economic problem may arise.

The experience was humiliating for her and the entire management of the bank, said it was the first time that the bank would be investigated in its entire history.