Hopes of unanimity of positions and harmony of fiscal and monetary policies appear dim following an alleged demand for a review of the powers of the Central Bank of Nigeria, CBN, by the Ministry of Finance.

Officials of a federal agency confided in Vanguard yesterday that the top leaderships on both sides are mutually antagonistic of each other’s positions, adding that it has degenerated to a personality clash.

A newspaper had said yesterday that the Finance Minister, Mrs Kemi Adeosun, told a visiting team of legislators to cut the powers of the apex bank for what she allegedly called extensive powers which she blamed for the disconnect between Federal Government’s fiscal policies and the monetary policies.

Reacting to this, a close aide of the minister told Vanguard that the entire publication was “a hatchet job” against the minister aimed at undermining her reputation. 

He alluded to a collusion with CBN by those who he said, rigged the meeting.

He also stated that media presence at the meeting was masked, adding that many things the minister said were “doctored” and some totally removed from the content of the said publication, adding that a formal protest letter from the minister to the media house was underway.

Surprisingly, one of the aides of the CBN governor who pleaded anonymity told Vanguard that the apex bank was equally upset with the publication, but would not dignify it with a response. He also claimed that the Finance Ministry has been undermining the apex bank for some time now.

Moreover, he claimed that the ministry was opposed to removal of the 41 items from participating in the interbank foreign exchange market.

The latest discord was coming barely five days after a rapport appeared to have been forged between the authorities.

The ministry was fully involved in the pre-monetary policy committee consultative meeting held last week as prelude to the CBN’s Monetary Policy Committee, MPC, meeting of Monday and Tuesday this week.

However, the outcome of the MPC meeting was at total variance with the position of the ministry, especially on the benchmark interest rate, the Monetary Policy Rate, MPR, which the MPC maintained at 14 per cent despite opposition voiced by Adeosun since third quarter of 2016.

Analysts have blamed crises in the economy on policy disharmony between CBN and the Finance Ministry. They are now more worried at the growing discord with this week’s development.

Reacting, Bismarck Rewane, MD/CEO, Financial Derivatives Company Limited stated: “My understanding of what the minister is saying is that the CBN should not have both instrument autonomy and policy autonomy.

“The CBN should be the one to set the policy objectives and also determine the instrument to be used to achieve it. I believe she is saying that a separate body should set monetary policy objectives, just like what obtains in United Kingdom and the United States, while the CBN can have the freedom to determine how to achieve that objective. So I believe she is saying the CBN should not have both instrument autonomy and policy autonomy.

For Aminu Gwadabe, President, Association of Bureaux De Change Operators of Nigeria (ABCON), “the fact is that the powers given to the CBN is for a purpose. The people that gave the CBN autonomy have a reason for doing so.

Without the CBN having autonomy, there are a lot of risks.

“What I will suggest is that the Federal Government should constitute the board of the CBN and make the Minister of Finance a member of the board, not as chairman, but a member, so that there can be adequate consultation and discussion before the CBN comes out with its policies.”

For Johnson Chukwu,MD/CEO, Cowry Assets Management Limited, “it is too early to speculate on which of the powers of the CBN the Minister wants to be reduced. It is not enough to just say that the powers of the CBN Governor should be reduced. She has to specify in which area. Is it in the monetary policy or financial system supervision or management of the country’s external reserve?”

For MD/CEO, APT Securities & Funds Limited, Mr. Kasimu Garba Kurfi, “I will not advise the government to reduce the power of the CBN.

“Other countries of the world that experience economic depression did not reduce the powers of their central banks in order to recover, but rather planned and executed strategies both short , medium and long term to bail out their economies. Why should our own be exceptional?”

Also reacting, Managing Director/CEO, Capital Bancorp Plc, Mr. Aigboje Higo said: "We don’t need reduction of the CBN’s powers. We need a strong and independent CBN that coordinates well with fiscal authorities. The US model is ideal.”

Former president of Chartered Institute of Stockbrokers, Mr. Ariyo Olushekun, stated: “No, I don’t think it has to do with too much or too little power. What I think needed to happen is that there should be a warm and animated handshake between the CBN and those that drive the fiscal end of the policies equation so that there is a very good harmony to deliver coordinated, robust and complimentary policies that are consistent with the overall economic objective of government.”

Vanguard