Godwin Emefiele, Governor of the Central Bank of Nigeria, has admitted that the country’s economy is in dire straits under President Muhammadu Buhari’s regime.
Against the backdrop of the worsening unemployment, inflation rate and rising debt profile, Mr Emefiele acknowledged that Mr Buhari had a precarious situation on his hand.
“Nigeria is unfortunately in a bad situation in the sense that we are facing a problem about productivity output which is GDP. We are also confronted with the problem of inflation,” said Emefiele.
On Thursday, as seen in social media footage, the CBN boss reacted to Governor Godwin Obaseki’s claim that the federal government printed N60 billion to share among the states in March.
“If you understand the concept of printing money, printing money is about lending money; that is our job. There is no need putting up the controversy of printing money as if we are going into the factory printing money and then distributing it on the street.
“It is very inappropriate for people to just give some colouration to the word printing of money as if it is some foreign word coming from the sky,” Emefiele argued.
Obaseki had said last week that in another year “or so,” the federal government might run out of cash.
“Where will we find this money that we go to Abuja to share every month? Last month, we got FAAC for March. The federal government printed an additional ₦50 to ₦60 billion to top-up for us to share,” the governor claimed.
Further discrediting Obaseki’s claim, Mr Emefiele disclosed that CBN gave support loans to states when the country was hit with a recession in 2016, pointing out that the states have yet to refund the loans.
In January, Fitch Rating, an American credit rating agency, warned that Mr Buhari’s continued reliance on the CBN to fund the country’s budget deficit might pose severe economic consequences.
The agency disclosed that Mr Buhari’s regime directly borrowed 1.9 per cent out of an estimated 3.7 per cent GDP from CBN to fund deficits in the 2020 fiscal plan.
The report expressed fears that sustained use of direct monetary financing could raise macroeconomic stability risks given the current weak institutional safeguards.
It, however, expected Mr Buhari’s regime to reduce its leanings to its overdraft account with the CBN, which enables cash advances from the bank to the federal government in 2021.
In response, Mr Emefiele argued that it would be irresponsible not to finance the federal government when revenues dropped.