The Monetary Policy Disaster of Buhari and Emefiele

The economic challenges and headwinds facing Nigeria have not been adequately addressed by political parties and candidates. For anyone who fully understands the stakes of an economy teetering on the brink of bankruptcy, the assumptions and promises of the candidates and their political parties are disconcerting. This speech reviews a critical economic issue in the realm of monetary policy and concludes with questions about how presidential candidates will rise to the challenge.

The Central Bank of Nigeria and the Federal Government led by Major General Muhammadu Buhari (Retired) have conspired and flagrantly violated the provisions of Section 38 of the CBN Act on Advances of the CBN to the federal government to finance the federal deficit. The advances exceeded the statutory limit – five percent of the previous year's actual receipts. We now have over N22 billion in ways and means, being high power money, not backed by value, pumped into the Nigerian economy and mismanaged by the administration. The administration was unable to reimburse within the legal period of one year. He addressed a request to the National Assembly to convert the advances into debt so that they could be securitized by a long-term bond.

Certain questions arise from this state of affairs. The first involves a President and Commander-in-Chief, the Minister of Finance, and the Chief Legal Officer in the person of the Attorney General of the Federation, all conspiring to break the law. The Attorney General is included because he should have properly advised the President and the Minister of Finance and if they refused his advice, he was free to do what was necessary. They conspired to form the guilty mind and went ahead to commit the offense through the physical act. Yes, this is an offense against the people of Nigeria, a desecration of fundamental fiscal and monetary standards amounting to an abuse of power, which should have resulted in dismissal and dismissal.

The second relates to the constitutional role of the National Assembly in the exercise of the role of control of the executive. The National Assembly saw nothing wrong with the advances, heard nothing wrong, and continued to pretend that everything was fine and sang about it in their hosanna choir mentality. Despite the colossal remuneration paid to NASS members, they failed the Nigerian people and left their work unfinished. The third is that the CBN gained independence in its enabling legislation. The CBN should have resisted the attempt to violate its enabling statute and ensured that it released advances in accordance with the law. But the CBN Governor saw himself as a politician and, indeed, had sought presidential nominations in the ruling All Progressives Congress before being arrested by Buhari.

Furthermore, the same Debt Management Office that uttered nonsense about Nigeria's debt sustainability, despite evidence to the contrary, is now sounding Buhari's alarm bells leaving N77tn in debt for the next administration. The DMO had resisted all lofty advice to start taking action to reduce borrowing while pronouncing nonsense like the debt-to-GDP ratio, when it was clear to all that debts are not repaid with dead parts. of GDP that contribute nothing to income. The above demonstrates a failure of institutions and the rule of strong men and women who consider themselves above the law.

The president forwarded a request to NASS to essentially convert the huge ways and means into a loan; converted into a debt to be securitized by a bond. It is simply asking NASS to approve a loan application after the money has been taken by the executive and spent. Nigeria is now faced with a dilemma whether to simply continue to provide repayments within the budget, which will be extremely costly as the money to do so will be borrowed at a higher interest rate or opt for a long-term bond. term which will be less expensive. .

The recent attempt to overhaul the naira further showed the flight from reality that has become a hallmark of CBN monetary policy. In all states of the federation and at all banks, new banknotes have been extremely scarce due to the very low supply of the CBN. The author of this speech was still paid with old notes during the last two days of withdrawing money from the banks. CBN's director of corporate communications, Osita Nwanisobi, was reported on the front page of a major newspaper as stating that banks not having enough new notes was untrue and merely speculative and insisted on the sanctity of the January 31, 2023 deadline. Pray, how else would you describe the folly of monetary policy? When a CBN spokesperson blatantly lies and continues to market facts they know to be false and deliberate...