THE Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has expressed worries over the monthly disbursement of funds by the Federation Account Allocation Committee (FAAC) to the tiers of government, lamenting the allocation is impacting exchange rate stability.
Cardoso said while briefing journalists at the bank’s 297th Monetary Policy Committee (MPC) on Tuesday, September 24.
According to Cardoso, the apex bank had observed that the correlation between the FAAC allocation and liquidity in the banking system were causing demand pressure in the exchange rate market.
“The MPC noted the continued growth in money supply recognising the need to curtail excess liquidity in the system as well as address foreign exchange demand pressures.
“Furthermore, members observed a strong correlation between FAAC releases and liquidity levels in the banking system as well as it impacts on the exchange rates,” he said.
Going forward, Cardoso said the apex bank would monitor future disbursement by FAAC to determine its impact on prices.
“The committee therefore agreed to increase monitoring of future releases with a view to addressing its effects on price development.”
The CBN boss also raised concern about the growing level of fiscal deficit of the Federal government, adding that the apex bank acknowledged the efforts of the fiscal authorities not to resort to Ways and Means financing to cover budget deficit.
A check by The ICIR shows that the tiers of government, federal, states and local councils, have received approximately N9.68 trillion from FAAC allocation between January and August this year.
In January, it shared N1.15 trillion, N1.15 trillion February, N1.12 trillion March, N1.21 trillion April, N1.14 May, N1.35 trillion June, N1.36 trillion July, and N1.2 trillion August.
To address the free fall of the naira, CBN had introduced all sort of measures, including blocking the online foreign exchange trading platform, Binance and other crypto firms.
In one of it’s publications, The ICIR reported that Cardoso said more than $26 billion was channeled through the Binance platform in 2023 that could not be traced.