Muhammad Sanusi II, the former governor of the Central Bank of Nigeria (CBN), has criticised the lending practices of the CBN under former President Muhammadu Buhari, claiming they contributed to inflationary pressure and the devaluation of the Naira.
The CBN’s loans to the federal government, totalling £22.7 trillion, have raised concerns about their impact on economic stability.
Sanusi emphasised the adverse effects of the central bank’s expansionary monetary policy through Ways and Means, a mechanism allowing the government to borrow from the CBN.
This substantial injection of funds fuelled inflation and weakened the national currency. Sanusi expressed optimism about the future, highlighting the need for a shift away from the recent trend of expanding the central bank’s balance sheet.
The current CBN governor, Olayemi Cardoso, has signalled a return to the bank’s primary mandate of ensuring price stability.
The CBN has implemented aggressive monetary tightening measures, including open market operations, Open Buy Back (OBB), and high Treasury bills rates, indicating a commitment to financial system stability and inflation control.
Sanusi’s remarks underscore the challenges faced by the CBN in managing the economic fallout from previous policies while emphasising the importance of a strategic shift towards sustainable financial practices.
Source: Leadership Newspaper