Governor Olayemi Cardoso of Nigeria announced on Tuesday that the central bank will support the government’s goal of economic growth by taking on “more limited advisory roles” rather than directly intervening in the budget.
In an email speech, Cardoso claimed that the bank’s present strategy made it difficult to distinguish between fiscal and monetary policy, which made it more difficult for it to control inflation and foreign reserves.
The central bank adopted an unconventional monetary policy by supplying money markets with liquidity through interventions, maintaining the naira’s artificial strength under former governor Godwin Emefiele, who was removed in June.
“There is a need to pull the central bank back from direct development finance interventions into more limited advisory roles that support economic growth,” Cardoso stated.
The largest economy in Africa was experiencing record debt, double-digit inflation, and currency depreciation at the time of the governor’s speech.
“There isn’t a magic wand that can be waved at the current economic challenges,” Cardoso stated about the central bank.
He did, however, propose that the central bank could promote growth in a number of ways, such as by energizing financial products and institutions to support the economy’s emerging sectors, increasing financial inclusion, and uniting multilateral stakeholders to support initiatives in the public and private sectors.
Nigeria’s biggest reforms in decades have been initiated by President Bola Tinubu, who has lifted limits on foreign exchange trading and ended an expensive gasoline subsidy. There has been pressure on him to boost the flagging economy.
After taking office in September, Cardoso declared that the bank would take steps to improve its corporate governance, win back trust, and concentrate on its primary duties in order to regain credibility.
