CBN Governor, Sanusi Lamido Sanusi
Festus Akanbi and Obinna Chima
A former Director-General at the West Africa Monetary Institute, Accra, Dr. Okwu Joseph Nnanna, has said that the budget of the Central Bank of Nigeria (CBN) cannot be decided by members of the National Assembly because of the dynamic nature of the apex bank’s operations.
Nnanna, also a former director of research and statistics at the CBN, made this remark while presenting a speech titled: ‘The Imperative of the Central Bank Independence: An analytical Framework - A case Study of the CBN,’ at the 17th annual seminar for financial journalists in Akure.
According to him, “the budget of the CBN is not like the budget of a state government. I will say about 80 per cent of the CBN’s budget goes for Open Market Operations (OMO).
“The central bank’s budget is not static but dynamic so it is not possible that the Bank would present its budget to the lawmakers before its implementation because it does not know how much it would spend at the beginning of each year itself,” he said.
He also emphasised that the preoccupation of a central bank’s budget is not about making profit or loss like most government agencies, but that of sustaining price stability.
He explained that the CBN autonomy had never been absolute, as the Bank is accountable to the Presidency, which according to the economist, the regulator gives regular reports on what it is doing; “to the National Assembly, as it gives a report to the lawmakers at least twice every year, and to the general public through the press.”
Responding to questions from journalists, a member of the Board of the CBN, Prof. Sam Olofin, also explained that the budget of the apex bank cannot be fixed by the lawmakers, saying that economic situations may prompt the Bank to go beyond its proposed budget.
Olofin cited the case of the then rescued banks where the CBN had to inject funds to save the financial institutions, depositors as well as the economy.
“The CBN itself does not know how much it will spend. It is not possible. A bank may be in crisis and may need money to shore it up. How do you determine how much to spend to intervene in the banks? How do you determine how much government will spend to mop up funds? It is difficult for the CBN to determine how much it will be. The CBN is always there to clean up the economy,” he explained.