CBN contributed to Nigeria’s inflation – Moghalu

A FORMER deputy governor of the Central Bank of Nigeria (CBN), Kingsley Moghalu, has said the apex bank contributed to Nigeria’s high inflation figure through illegal financing of the Federal government’s massive deficits.

Moghalu said this on an ARISE NEWS programme on Thursday, June 22.

“The central bank itself was contributing to inflation through the monetary phenomenon of illegal financing of the Federal government’s massive deficits to the tune of N23 trillion, in ways and means lending.

“You’re contributing to inflation with one hand, but you say you’re fighting inflation with the other hand.  Why was the ways and means lending so high? It is because you have a government that could not manage its fiscal books,” Moghalu said.

According to him, the new policies by President Bola Ahmed Tinubu are “necessary but difficult” and should have been taken many years ago by previous administrations.

Moghalu, however, offered some words of caution.

“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. 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. 

“I believe that the reforms are moving in the right direction and there are structural bottlenecks that must be opened,” he said.



    He explained that the reforms were the beginning of a series of reforms that have to take place in the Nigerian economy.

    He added that in order to mitigate the shock and adverse effects on the country’s citizens, the government should support foreign exchange reform policies with trade reform policies. 

    Moghalu stressed that the government should explore strategies to establish a thriving economy with a more favourable naira exchange rate in the global market.

    “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. We cannot have a fixed exchange rate, an independent monetary policy, and a free float of capital all at the same time. You have to make a choice,” he said.

    Usman Mustapha is a solution journalist with International Centre for Investigative Reporting. You can easily reach him via: [email protected]. He tweets @UsmanMustapha_M

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