Kingsley Moghalu: CBN Contributed To Inflation, Should Not Have Funded Government’s Deficits

At the investors and exporters (I&E) market, the Nigerian naira climbed on Tuesday, ending the day at N756 to the dollar. 

The closing rate reflects a 1.8 percent increase from the N770 recorded on Monday, according to FMDQ Securities Exchange Limited. This is a week after the government harmonised the exchange rate windows. 

In an interview with ARISE NEWS on Thursday, Former Deputy Governor of the Central Bank Of Nigeria, Kingsley Moghalu, spoke on how  the central Bank can take contribute to financial state of the nation saying that they need to be more responsible in handling spending of the Federal Government. He spoke on importance on taking note that these policies are “necessary but difficult” as they should have been taken years back in the Nigerian administration.

“The central bank contributed to inflation through illegal financing of the Federal Government’s massive deficits. This happened due to the government’s poor fiscal management. If the federal government becomes more responsible with its budget and spending, it will help the central bank manage inflation.”

Earlier in the interview, the new economic policies surrounding the Nigerian economic market reforms by the current President of Nigeria, President Bola Ahmed Tinubu. He assured that the reform is “moving in the right direction after stating that it is driven by the desperate situation of the nation’s economy that has put that has placed the masses on edge.

“But I want to put a caveat. It’s important that we are not carried away by the joy of foreign investors. An economy is meant to sell the people of Nigeria. And the reality is that the people of Nigeria have suffered greatly because the cost of living has risen far beyond their means so the government cannot move fast enough. 

“For example, on the matter of the new minimum wage. On the matter of what to do and is there a way to subsidised transportation. Things like this should be addressed with alacrity. They should be addressed with the same determination of things we have seen in terms of this reform. 

“In other wise, I believe that the reforms are moving in the right direction and there are structural bottle necks that must be opened.

These reforms are just the first stage. They are the beginning of a series of reforms that have to take place in the Nigerian economy.”

He further stated that the government would need to back up policies directed towards Forex reform with trade reform policies to lessen the shock and negative impact on the nation’s citizens. This implies that the government must look for way to create a productive economy with a stronger Naira rate in the world market to exit the realm of import dependent economies.

“The goal should be to make a transparent market and a corruption free one despite the discomfort it may cause for the masses.”

On the topic of the suspension and arrest of former CBN Governor, Godwin Emefiele, the former governor stated that though he would like to with hold his opinions, he holds Emefiele’s performance as governor at the “highest minimal regard.”

“We have seen the consequence in not being careful in appointing people for such a sensitive role. They make decisions and are just trying to achieve some self interest at the particular time but are not weighing the consequence on the masses of an economy. There are lessons to be learnt from what we have seen over the last several years.

“you cannot substitute political mandates for statuary mandates of the Central bank. I think it is has side tracked. What we are seeing today is not a surprise at all. 

“Especially, going to contest for the presidency while sitting on the governorship seat of the bank. I think that just crossed the line.”

Moghalu stated that he had always been an advocate for subsidy and Forex reform but lessons we should learn are that many Nigerians need better understanding on banking and this is needed to operate effectively. 

“Nigerians don’t understand that the CBN doesn’t operate like a commercial bank. It’s  not after deposits.”

“We have the concept of what we call the impossible trinity. So we have to understand these things and that is what we call the ‘Policy Trilema’. That a country  we cannot have a fixed exchange rate, and independent monetary policy and free float of capital all at the same time. You have to make a choice.”

Still on the topic, Moghalu stated that the administration would need a governor to run the CBN who not has Integrity and is ready to hit the ground running but also a recognizable name to the nation and the world rather than a person to fold and bend to the will of the government.

“When you’re just looking for somebody or just ‘our man’,  it’s like ordering stock fish and you cannot look at your plate and expect salmon.

Glamour Adah

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