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CBN Blames Rising Inflation on Governor’s Ostentatious Spending

By on November 13, 2012

CBN Governor, Mallam Sanusi Lamido

The Central Bank of Nigeria (CBN) has called on State governors to watch their spending habits, as their extravagant spending habits is responsible for inflation in the country.

This warning was issued by the deputy governor, financial system stability of the Central Bank of Nigeria (CBN), Kingsley Moghalu during the presentation of a paper at the 5th Annual Banking and Finance Lecture of the Nnamdi Azikiwe University, Awka.

Moghalu added that according to a survey conducted, state governors without cause spend money extravagantly in display of self and class, adding that they do this without knowing that their actions cause inflation and devaluation of the naira.

Moghalu who represented the CBN governor Mallam Sanusi Lamido Sanusi spoke on the topic, “The Contributions of CBN to the Economic Development of Nigeria,” said, that was why the CBN should have independence.

“When the CBN loses its independence to the level that a state governor or a top politician can call the CBN governor and say, ‘Mr XYZ is coming for loan, please give him at 6%’, and then you know that the fall of the country is imminent,” he added.

Muoghalu argued that if the country must continue to move ahead, the CBN needs autonomy to make its budget and determine its own expenditure, this, he said will hinder interference from politicians.

“In Nigeria, people have continued to challenge our independence, but it is so because we are in a democracy, and people can talk. This is a policy battle that is still being fought, but the politicians cannot continue to dictate for the CBN what the interest rate should be.”

He stressed the importance of the autonomy lamenting the plot of those opposing the autonomy and independence of the bank, saying that, they are either doing so as a result of ignorance or clearly do not want the growth of the nation’s economy.

He said the economy will be more viable if CBN is not answerable to politicians who would manipulate it at will to suit them.

“Imagine a CBN where the governor is answerable to another personality who is the chairman of the board, and that chairman happens to be a committed member of a political party and his party is standing for election, the tendency is that he will want a lot of favour from the bank, at the detriment of the nation’s economy,” Muoghalu said.

In a reaction yesterday, the director-general of the Nigeria Governors’ Forum, Dr. Asishana Okauru, said they secretariat cannot react without reason, adding that it would look into the condition under which the statement was made, adding that the CBN is a credible institution, so he does not expect such statements from it.

“I don’t want to react in a vacuum. I will check it up with the CBN. The CBN is a credible institution and so we will look into the matter. We do not expect the CBN to make such statements,” he said.

  • Nura

    Then do something about it