Central Bank of Nigeria (CBN) cannot currently fund more intervention programmes amid rising food inflation.
Central bank of Nigeria Governor, Yemi Cardoso disclosed recently during a plenary session on the Senate floor.
He said the apex bank has halted over N10 trillion quasi-fiscal measures which were disguised as “intervention programs” over the years.
These measures had resulted in excess liquidity in the economy causing distortionary effects,and leading to an uptick in core inflation and food inflation respectively.
“On our side at CBN, we have responded with significant monetary policy tightening to rein in inflationary pressures. Empirical analysis has established that money supply is one of the factors fueling the current inflationary pressure. For example, an analysis of the trend of money supply spanning over nine months shows that M3 increased from N52 trillion in January 2023 to 68.2 trillion in November 2023, representing a 31% increase over the period.
“We have also halted quasi-fiscal measures totalling over N10 trillion at the CBN previously disguised as development finance interventions. These measures have contributed to an increase in money supply, raising prices to the level of inflation we are grappling with today.
“All we are saying as the central bank is that we cannot engage in interventions.”
Mr Cardoso noted that the CBN, while it lacks the capacity, is working to partner with other ministries on the fiscal side to promote efficient and strategic programmes.
He insists that CBN will going forward be an intermediate mechanism for those who can provide financing for intervention programmes to help curb rising food inflation in the country.
“We will work closely with those that have that ability and help them to create capacity and to be a conveying mechanism for those that have that capacity to do it.
“So, it will be a partnership as opposed to a situation where we get involved in it directly. And as I say, run the risk of failed interventions which are typically inflationary.
(C) ControlTV 2024.
