The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has declared that the financial institution will cease funding intervention programmes. This revelation came during Cardoso’s appearance before the Senate Committee on Banking, Insurance, and Other Financial Institutions in Abuja on Friday.
Cardoso disclosed that the CBN has put an end to over N10 trillion worth of quasi-fiscal measures, which were previously disguised as “intervention programmes” over the years. He emphasized that these measures had contributed to inflationary pressures, prompting significant monetary policy tightening from the apex bank to rein in inflation.
The Governor further stated that at the upcoming Monetary Policy Committee (MPC) meeting scheduled for February 26 and 27, the CBN will review additional situations and make further decisions regarding these crucial issues.
Cardoso remarked, “On our side at CBN, we have responded with significant monetary policy tightening to rein in inflationary pressures. 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.”
Regarding development finance, Cardoso acknowledged the challenges stemming from excessive liquidity injected into the system, leading to distortions and inefficiencies in resource allocation. He emphasized the importance of ensuring that funds intended for intervention programmes reach their designated beneficiaries effectively.
In conclusion, Cardoso reiterated the CBN’s stance, stating, “All we are saying as the central bank is that we cannot engage in interventions.”
The decision is expected to have far-reaching implications for the country’s monetary policy and economic landscape.