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Nigerian lawmakers seek to curb central bank’s role in economic policy

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Saturday, June 1st, 2024
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Nigerian lawmakers are seeking to limit the central bank’s control over economic policy by proposing to set up a committee to coordinate monetary and fiscal policies, headed by the finance minister, according to a bill in the Senate.

The proposal by a member of the ruling party comes as inflation in Africa’s most populous nation hit a 28-year high of 33.69% in April amidst sluggish economic growth and currency woes.

Under the proposed law, the central bank would be in charge of monetary policies as before, but a new committee headed by the finance minister would be responsible for coordinating monetary and fiscal policies.

Some economists said that adding a committee to coordinate monetary and fiscal policies could severely weaken the central bank. The proposal is so far backed by 32 members of the ruling party and the bill would need to be approved by the Senate and then President Bola Tinubu’s signature to become law. The government has not given its view on the bill yet.

“You will have the federal government tampering with the autonomy of the central bank. You cannot have external parties making decisions about monetary policy, which is the exclusive preserve of the bank,” Abuja-based economic analyst Kelvin Emmanuel said.

The International Monetary Fund has previously warned Nigeria about interfering with the independence of the central bank, arguing that it could hamper the country’s ability to tackle inflation and restore stability

The central bank governor would also serve a single six-year term instead of a maximum of two five-year terms currently.

Godwin Emefiele, who was governor until June last year, was the first to get a second term as central bank head, where he implemented currency restrictions which harmed the economy and Nigeria’s ability to import goods, thereby stoking inflation.

Senators have also proposed to decrease the amount of temporary advances the central bank can grant the government as budget support. It was increased under Muhammadu Buhari who was Nigeria’s president from 2015 until May last year.

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