Why CBN must halt its money printing machine now
By Oludare Mayowa
At the last count, the Central Bank of Nigeria (CBN) has printed N11 trillion new naira notes to fund the federal government budget deficits.
This was besides the huge borrowing from both local and external sources by the President Mohammadu Buhari administration in the last six years of his government.
The global rating agency, Fitch Rating in its recent outlook on the Nigerian economy said; the repeated financing of the Federal Government’s budget deficit by the Central Bank through Ways and Means is a risk to Nigeria’s macroeconomic stability.
But the CBN Governor Godwin Emefiele would not have any of such caution from the global agency.
According to Emefiele, “It is unfair and very unfortunate that Fitch, which is known to be a first-class company, would hold such views on what we are doing.”
It’s unfortunate that the CBN that is supposed to be combating inflation and protecting the nation’s foreign exchange reserves and ensuring macroeconomic stability is the one promoting reckless printing of cash to back government spending and at the same time throwing huge money into the economy via its so-called intervention funding.
Experts believed that deficit monetisation has helped fuel inflation and weaken the naira, which the government has been battling to ensure stability in the foreign exchange market.
Even the International Monetary Fund (IMF) and the World Bank are not comfortable with the huge Ways and Means by the CBN to the federal government because it was considered as one of the major causes of high inflation in the economy.
In its latest report, the IMF said; “the monetary policy operational framework should be reformed and Central Bank financing of budget deficit phased out in order to reduce inflation.”
Computing the debt stocks and the Ways and Means, and the resources generated from both non-oil and oil sector, this government has spent humongous cash in the last six years in both budgeted and out of budget financing.
Putting all this money together, ordinarily, the living standard of Nigerians ought to have improved significantly since the advent of this administration, however, the reverse seems to be the case, and rather Nigerians are poorer than they were in 2015.
How do we rationalize the huge expenditures of the present administration and its performance in terms of adding value to the lives of Nigerians?
Many may want to explain this away with the funding of the fight against insurgency and bandits in the North East, North West and even North Central and the massive rehabilitation of the rail line going on in the country.
But analyzing the expenditures on capital projects since the advent of this administration and resources expended on the war against Boko Haram, there are still a huge hole left to be accounted for at the end of the day.
Though there is no clear evidence of corruption within the top rank of the administration, however, that may not be ruled out considering the disparity between contract sums for roads, rail and other projects in Nigeria and other parts of Africa and the rest of the world.
The cost per kilometers of road in Nigeria has been found to be higher than what is awarded in some parts of the world, creating suspicion that something fishing may be happening in the country’s procurement system.
From the auditor general report last year, it was also obvious that there still exist many leakages in the system which, are yet to be plugged with huge funds that should have been deploy for development purposes flittering away and ending up in private pockets.
However, beyond the issue of corruption, Nigeria still retains huge bureaucracy despite the dire economic implications on the lean resources of the country.
Till date, the aircraft in the Presidential fleet is yet to be reduced despite the promise made by the President while campaigning in 2015 to reduce the fleet and convert some of the aircraft to a national carrier.
Political appointments remain a tool for patronage rather than an instrument for development, with duplications in many cases and people with overlapping roles appointed to meet political, clanish and geopolitical quota.
Analysts said if the government muster the political will to reduce the costs of governance, it would have slashed its budget deficits by half and save huge resources that can be deployed to other use.
Today, the national debt stock has grown from N12.12 trillion at the end of June 2015 when President Buhari assumed power to N32.22 trillion by the end of September 2020.
This means that the government has accumulated about N20.10 trillion debt in six years, this is beside the N11 trillion unredeemed Ways and Means, an euphemize for the printing of naira cash for government to spend by the CBN.
Without any accountant auditing the account of the government, it could be safe to say that Nigeria has not gotten value for money from this government expenditures since inception in 2015.
The country has slipped into recession twice in the life of this administration, the local currency has been devalued for the umpteenth time from around N195 to the dollar when President Buhari assumed power to around N477 to the dollar on the street market.
The unemployment rate has gone up to more than 27 percent, inflation at 15.75 percent, insecurity has escalated while poverty has reached an epidemic proportion to the extent that Nigeria is now regarded as the headquarters of world poverty.
The CBN will do well to stop the tap, stop the printing machine and end the cheap money being given to the government to spend and make the government efficient in both revenue generation and expenditure management.
The CBN has not been able to publish its annual reports and statements of account since 2018 simply because of its creation of huge assets without correspondening liabilities to back it up, putting the accounts in disarray.
President Buhari was popularly elected in 2015 to end the rot in the system, he was elected to stop the bleeding of the economy, but unfortunately, his reign seems to have compounded the situation more than he met it.
It is not too late for the government to review its direction and turn back toward sustainable growth, help the country to plug all the leakages and move the economy in the right direction.
This is the only way the government of President Buhari can leave his foot on the sand of time, otherwise, he would be remembered for the evil deed his government has done than the little impact he made during his reign.