As the CBN grudgingly affirmed the Edo State Governor, Godwin Obaseki’s claim that it printed money for the Budget Support Facility given to States Governments in the country. Some Nigerians have reacted to this and highlighted the economic consequences of such development.
CBN Governor, Godwin Emefiele, recently reacted to the news about the money printing issue, he said:
“I keep saying this, it would be irresponsible for the Central Bank of Nigeria or any central bank or any FED to stand idle and then refuse to support its government at this time.”
“And what is being done; is done in any clime, and at the last monthly Policy Committee meeting, I did say and I gave data about what is being done even in developed economy, about what need to be done to shore up their economy and take them out of recession,” he added.
Although, report of money printing to mitigate the economic implications of the pandemic has been recorded in developed countries which include USA, Canada, and UK, the rampant spread of corruption in Nigeria has made many Nigerians worried about the CBN’s action.
Abdulqudus Sanni, an economist, said:
“Dear CBN, if you go back to some of the basic concepts in economics, you will realize the implication that printing money has on the economy. Inflation is one.”
“The Nigerian situation is in need of strong expansionary Fiscal policies at the moment. To raise money for these projects, a strong option would be the issue of bonds as opposed to the CBN printing money,” Abdulqudus added.
@caramelskin5, a finance analyst, tweeted:
“It’s ok to print money and lend (Quantitative Easing is the motive I suppose) but the question is, has it been effective?
“End result as we can all see is the rising inflation. Meaning, that money is only concentrated in a few hands and has not been used to boost purchasing power via the creation of more jobs. Those funds were supposed to be used to develop critical sectors of the economy (impact investment) that will create jobs and put money in people’s purse to spend. That has not happened and unfortunately that is what we need for GDP to grow.
“Nigeria is still heavily dependent on importation so what we are witnessing is the cost push effect of foreign exchange differences in price over time. People will continue to demand for quality and that explains the crave for foreign items.
“CBN should adopt a policy to determining a company can meet pre-determined quality standard across sectors as part of eligibility for funding. That will prepare them for the competitive market and guarantee business sustainability.
“Lack of infrastructure to preserve food items is another major reason for surge in food inflation because farmers will end up making us to pay for both spoilt and fresh items. All they need to do is calculate total cost of production and spread over goods available for sale.
“Strict implementation of extant eligibility rules, efficient monitoring desk, periodic performance measurement, funds disbursement in phases, et al are some things requiring urgent review.
“Without the various CBN interventions, the Nigerian economy would have been worse off today.
“Again, we REALLY need to have a discussion on our fiscal discipline. As government spend on roads, hospitals and other infrastructures, citizens should see and feel the effect in their pocket. Something is wrong somewhere and we URGENTLY need to fix that too.”
Tola Odugbesi, a public policy analyst and tax experts, said:
“In a sane society, printing money is usually the last option after being unsuccessful with other ways of generating funds.
“Also, a nation can print money when the paper form of money in circulation is minimal. None is our case in Nigeria. It’s obvious that they ran out of ideas.”