Sanusi Alleges CBN's Ways and Means Suspension Led to Inflation and Naira Depreciation

Muhammad Sanusi II, the former governor of the Central Bank of Nigeria, has expressed concerns about the inflationary impact and depreciation of the Naira caused by the apex bank's lending to the federal government during the administration of former President Muhammadu Buhari through Ways and Means. The Central Bank of Nigeria (CBN) extended a loan of N22.7 trillion to the federal government, clarifying that it had been securitized to avoid negatively affecting its balance sheet. Ways and Means is a method through which the government borrows funds from the CBN.

Sanusi II emphasized that the aggressive monetary tightening measures adopted by the central bank, such as open market operations, Open Buy Back (OBB), and high T-bills rates, indicate the institution's commitment to maintaining financial system stability and controlling inflation. Speaking at MTN Capital Markets Day, an event organized by MTN Group, Sanusi II highlighted the need for the central bank to balance its primary role of price stability while minimizing costs to both the bank and the government's balance sheet. He acknowledged the recent tightening measures, including OMO Bills and OBB rates, as a positive step towards achieving these objectives.

Olayemi Cardoso, the current governor of the CBN, had previously stated the bank's intention to return to its core role of ensuring price stability. Sanusi II endorsed the central bank's efforts to use non-conventional instruments in managing excess money in circulation. He reassured the audience that although the effects of these monetary policies may take time to materialize, he believes the short-term outlook is positive and anticipates stability in the financial market.

During the event, Dr. Omolara Duke, the CBN's director in charge of the research department, represented Cardoso and announced that the era of the government accessing Ways and Means would be limited to no more than five percent going forward. Additionally, she revealed the central bank's focus on reducing the cost of remittances to boost inflows and transition them from the informal sector to the formal sector.