New Naira Notes: Finance Minister opposes plan, says ministry was not consulted
Nigeria's Minister of Finance, Budget and National Planning, Zainab Ahmed, has opposed plans by the Central Bank of Nigeria (CBN) to redesign some naira banknotes.
She said the ministry was unaware of the plans and only learned about them through the media.
She said this Friday when she appeared before the Senate Finance Committee for the department's budget defense session.
His comments come just 48 hours after CBN Governor Godwin Emefiele announced the plan to redesign the 100, 200, 500 and 1,000 banknotes and will go into circulation in December.
The plan is to redesign N100, N200, N500 and N1000 and start disbursing by December and by January 31, 2023 the old banknotes should be out of circulation.
He said the move was aimed at controlling the currency in circulation, managing inflation and combating counterfeiting.
Mr. Emefiele said currency management faces several daunting challenges that have steadily grown in scale and sophistication, with attendant and unintended consequences for the integrity of the CBN and the country.
The CBN boss further explained that the planned overhaul complied with Sections 19(a) and (b) of the CBN Act 2007, on which the CBN management sought and obtained the approval of the President Muhammadu Buhari for redesigning, producing and circulating new series of banknotes at the N200, N500 and N1,000 levels.
I was not consulted - Minister of FinanceBut while responding to a question from committee member Opeyemi Bamidele (APC, Ekiti) on the proposed plans, Ms Ahmed said the planned overhaul of some naira banknotes portends consequences.
>
Mr. Bamidele had noted that two days after the announcement, the exchange of naira for one US dollar fell from 740 naira to 788 naira for one US dollar – due to the rush to trade stacked naira notes against foreign currencies , especially the dollar.
"The policy may be well designed, but the timing, by the realities on the ground, is very wrong as the naira may fall to 1,000 Naira to the US dollar before January 31, 2023 set for a stake full implementation of the policy,” he said.
The finance minister said she and her ministry officials were unaware of the policy, but only heard about it through the media.
“We have not been consulted at the Ministry of Finance by the CBN on the planned overhaul of the naira and we cannot comment on it as to the merits or otherwise,” she said.
p> READ ALSO: Naira in another record tumble as CBN replaces naira banknotes"As a Nigerian woman privileged to be at the pinnacle of Nigeria's fiscal management, the policy, as it is deployed at present, portends serious consequences on the value of the naira relative to others foreign currency,” she said.
Ms. Ahmed called on the committee to invite the CBN Governor for the required explanations regarding the merits of the planned policy and whether or not it is being implemented right now.
IMF urges cautionThe CBN's plan to replace higher naira notes has drawn criticism over how long the bank says it will allow users to redeem old notes. But analysts have spoken more about the impact the policy will have on the currency, as the rush of holders of illicit money to change their money into dollars drives the exchange rate even higher, further weakening the naira.
A former CBN deputy governor, Kingsley Moghalu, said the duration allowed by the bank is short and "could create enormous operational pressure on banks and some traders could prematurely reject existing banknotes once that new ones would come into circulation.”
He said, however, that "this decision is a necessary step to tighten the money supply and fight against high inflation".
According to Bloomberg, the International Monetary Fund has advised Nigeria to exercise caution to avoid any missteps that could undermine confidence in the financial system.
The Fund's resident representative, Ari Aisen, said the IMF had contacted the CBN for more information on the plan announced on Wednesday.
"We stand ready to provide any assistance...
Nigeria's Minister of Finance, Budget and National Planning, Zainab Ahmed, has opposed plans by the Central Bank of Nigeria (CBN) to redesign some naira banknotes.
She said the ministry was unaware of the plans and only learned about them through the media.
She said this Friday when she appeared before the Senate Finance Committee for the department's budget defense session.
His comments come just 48 hours after CBN Governor Godwin Emefiele announced the plan to redesign the 100, 200, 500 and 1,000 banknotes and will go into circulation in December.
The plan is to redesign N100, N200, N500 and N1000 and start disbursing by December and by January 31, 2023 the old banknotes should be out of circulation.
He said the move was aimed at controlling the currency in circulation, managing inflation and combating counterfeiting.
Mr. Emefiele said currency management faces several daunting challenges that have steadily grown in scale and sophistication, with attendant and unintended consequences for the integrity of the CBN and the country.
The CBN boss further explained that the planned overhaul complied with Sections 19(a) and (b) of the CBN Act 2007, on which the CBN management sought and obtained the approval of the President Muhammadu Buhari for redesigning, producing and circulating new series of banknotes at the N200, N500 and N1,000 levels.
I was not consulted - Minister of FinanceBut while responding to a question from committee member Opeyemi Bamidele (APC, Ekiti) on the proposed plans, Ms Ahmed said the planned overhaul of some naira banknotes portends consequences.
>
Mr. Bamidele had noted that two days after the announcement, the exchange of naira for one US dollar fell from 740 naira to 788 naira for one US dollar – due to the rush to trade stacked naira notes against foreign currencies , especially the dollar.
"The policy may be well designed, but the timing, by the realities on the ground, is very wrong as the naira may fall to 1,000 Naira to the US dollar before January 31, 2023 set for a stake full implementation of the policy,” he said.
The finance minister said she and her ministry officials were unaware of the policy, but only heard about it through the media.
“We have not been consulted at the Ministry of Finance by the CBN on the planned overhaul of the naira and we cannot comment on it as to the merits or otherwise,” she said.
p> READ ALSO: Naira in another record tumble as CBN replaces naira banknotes"As a Nigerian woman privileged to be at the pinnacle of Nigeria's fiscal management, the policy, as it is deployed at present, portends serious consequences on the value of the naira relative to others foreign currency,” she said.
Ms. Ahmed called on the committee to invite the CBN Governor for the required explanations regarding the merits of the planned policy and whether or not it is being implemented right now.
IMF urges cautionThe CBN's plan to replace higher naira notes has drawn criticism over how long the bank says it will allow users to redeem old notes. But analysts have spoken more about the impact the policy will have on the currency, as the rush of holders of illicit money to change their money into dollars drives the exchange rate even higher, further weakening the naira.
A former CBN deputy governor, Kingsley Moghalu, said the duration allowed by the bank is short and "could create enormous operational pressure on banks and some traders could prematurely reject existing banknotes once that new ones would come into circulation.”
He said, however, that "this decision is a necessary step to tighten the money supply and fight against high inflation".
According to Bloomberg, the International Monetary Fund has advised Nigeria to exercise caution to avoid any missteps that could undermine confidence in the financial system.
The Fund's resident representative, Ari Aisen, said the IMF had contacted the CBN for more information on the plan announced on Wednesday.
"We stand ready to provide any assistance...
What's Your Reaction?
