CBN says seed of current economic crisis planted by past public office holders
Kunle Aderinokun in Lagos, Francis Ndubuisi, Tobi Soniyi and James Emejo in Abuja
The presidency has faulted allegations made by former CBN Governor, and Emir of Kano, Mallam Muhammad Sanusi II, on the state of the economy, maintaining that the former apex bank boss did not get his facts right.
Sanusi had at a policy dialogue organised by the Savannah Centre for Diplomacy, Democracy and Development (SCDDD), criticized President Muhammadu Buhari administration for relying on massive fiscal expansion and a faulty foreign exchange policy that discourages investment to get the country out of the current recession.
The former CBN governor, who delivered a keynote address titled, “A Plan to Restore Confidence, Direction and Growth”, had frowned on a development whereby the CBN had become government’s lender of “first” resort rather than last, accusing the apex bank of a clear violation of CBN Act of 2007 (Section 38.2) which limits advances to the federal government at 5 per cent of the previous year’s revenues.
Sanusi had put the CBN total loan, overdraft to government at N4.7trn adding that the current CBN overdraft to federal government was more than 10 times the prescribed limit and even rising further.
A statement by the Senior Special Assistant to the President on Media and Publicity, Mr Garba Shehu, yesterday agreed that the government had overdrawn its account but disputed the figures put forward by Sanusi.
The statement issued by the presidency reads: “With every respect to the Emir, you know he is my ruler, because I come from Kano.
“He doesn’t have his facts as far as those issues are concerned. The issue in CBN, that government has overdrawn its Central Consolidated Account is true, but the overdrawing is within limits.
“The overdraw does not exceed 1.5 trillion. It is incorrect to say, as he did that the account was overdrawn by 4.5 trillion.
“But even assuming that he was correct. This is a government that has money in excess of the amount he mentioned in the Treasury Single Account, TSA. It is just like you, a bank customer operating two accounts, one in the red and the other, well funded to the point that it can at any time wipe the indebtedness on the other. Would any bank manager lose his sleep over this?
“This, I am told is what the IMF found at the CBN and they said it is perfectly normal.
“As for his opposition to the USD 30 billion loan, I am aware that the Minister of Finance is responding to that.
“As a private citizen, I want to read his statement again. I thought that the borrowing is for projects that include the railway and electricity development in the country.”
Also reacting to Sanusi’s critique of the economy, CBN said the current economic managers were not the architects of the current economic crisis.
Rather, CBN argued that the current economic crisis was caused by the failure of past public officers, who had the power and opportunity to set the economy on the path of greatness but failed to do so.
CBN Acting Director, Corporate Communications, Isaac Okoroafor, said, “We should not forget that the seed of our current economic crisis was planted by the failure of those who occupied public office in the past but failed to act in the long term interest of the Nigerian economy. It is easy to criticize from outside. It is always easier and the grass greener when people are out of office.
“The challenge we face today is a choice between pandering to the established interest in Nigeria’s speculative economy and the protection of the wages of the real stakeholders who work hard on fixed incomes; for they are the core victims of Naira depreciation.”
The banking watchdog noted that at this critical time when the country is deep in recession, “the CBN will continue to explore avenues with the Federal Government in order to find solutions to the current economic situation.”
It added that, “Already Nigerians are waking up to the call to be more productive and to look inwards and to be less dependent on the importation of foreign goods and services.”
In his critique of the economy, Sanusi had said the CBN was no longer independent and that the relationship between the apex bank and the federal government was no longer healthy. He had also criticised the implementation of the June 2016 FX reforms by the CBN, arguing that the creation of four new market rates would defeat the objective to unite the market in single, transparent rate.
But reacting to the criticism, CBN said it had “set up an inter-bank foreign exchange market where anyone who wishes to buy foreign exchange can bid for and buy through their banks. Or is it not true that CBN allocates dollars?
Arguing that, “there is nowhere in the world that the Central bank sits by and allows vicious speculators to solely distort the value of its currency endlessly,” the apex bank noted that, “All central banks intervene to buy or sell in the market to ensure that the local currency is protected from dubious attacks.”
The CBN urged its former governor to explore the channels of advice and contribution of ideas, which are open, rather than playing to the gallery by casting aspersion on its efforts to salvage the economy and the people in leadership at this critical time.
“The channels for advice and contribution of ideas on the current economic situation by all patriotic Nigerians are open. It is rather unfortunate that some people have chosen to play to the gallery and to make statements to disparage those in leadership at this time in total insensitivity to the larger interests of the Nigerian economy.”
On the submission by Sanusi that the federal government may not get creditors to grant its request to borrow the proposed $30 billion, even if the National Assembly approves it, the Debt Management Office (DMO) kept mute.
THISDAY’s efforts to get reaction from DMO on the development was futile as its Director General, Dr. Abraham Nwankwo, did not respond to enquiries. He neither picked his phone calls nor replied text messages sent to him on the issue as at press time.