A bill in the Senate indicates that Nigerian politicians are attempting to curtail the central bank’s authority over economic policy by suggesting the formation of a committee under the chairmanship of the finance minister, tasked with coordinating monetary and fiscal policies.
The proposal, made by a member of the ruling party, comes as the most populous country in Africa experienced 28-year high inflation of 33.69% in April due to weak economic development and currency problems.
The proposed bill would keep the central bank in charge of monetary policy, but it would also create a new committee led by the finance minister to coordinate fiscal and monetary policy.
A committee to coordinate fiscal and monetary policies might significantly undermine the central bank, according to some analysts.
Currently supported by thirty-two members of the ruling party, the bill needs to pass the Senate before President Bola Tinubu signs it into law.
The government has not yet expressed its opinion on the bill.
Laptops 1000“The central bank’s independence will be compromised by the federal government. Monetary policy decisions are the sole domain of the bank; you cannot have outside parties determining them,” economic analyst Kelvin Emmanuel, of Abuja, stated.
The IMF has repeatedly forewarned Nigeria against meddling with the central bank’s independence, claiming that doing so would make it more difficult for the nation to combat inflation and reestablish stability.
Additionally, the governor of the central bank would only hold office for one six-year term as opposed to the existing limit of two five-year terms.
As the first person to be appointed to a second term as head of the central bank, Godwin Emefiele, the governor until June of last year, imposed currency restrictions that hurt the country’s economy and Nigeria’s capacity to buy commodities, which in turn increased inflation.
Additionally, senators have suggested reducing the quantity of short-term advances that the central bank can provide to the government in order to support the budget. Under Muhammadu Buhari, the president of Nigeria from 2015 to May of last year, it was raised.
