The governor of Nigeria’s apex bank – Central Bank of Nigeria, CBN – Godwin Emefiele, has upheld the essence of printing more money to finance the federal government budget.
In a press briefing released Tuesday by Emefiele it stated that, “If government cannot finace all its obligations, the central bank should offer support as a lender of last resort.”
Emefiele faulted Fitch ratings – a global rating agency – Fitch had claimed that, repeated financing of federal government’s budget deficit by the central bank through various means, poses a threat to the macroeconomics stability of the country.
The CBN boss berated Fitch ratings, stating that central bank financing hinders the ability of authorities, to tame inflation that hit a three-year high in December. He further insisted that CBN is banker of the government, and lender of last resort.
“It is unfair and very unfortunate that Fitch,which is known to be first class company,would hold such views on what we are doing,” Emefiele said.
However, in a letter jointly signed by Emefiele, and the Minister of Finance, Zainab Ahmed. The duo vowed to eradicate reserve-bank lending by 2025, before issuing $3.4bn in emergency in April.
Meanwhile, the rise in inflation and a fall in Naira, was caused by deficit monetisation; which the government has also vowed to allow to float freely.
Similarly, the International Monetary Fund and World Bank have said the central bank financing subverts confidence, and hampers long term investment.
Ijeoma Njoku reporting, Obinwannem News
