Lamido Sanusi
The Governor of the Central Bank of Nigeria, CBN, Mallam Sanusi Lamido Sanusi, has vowed to punish any bank in the country that is involved in the pension fraud currently under investigation by the Senate.
Sanusi, who stated this, yesterday, during a press briefing at the end of the Monetary Policy Committee meeting in Abuja, said the bank was eagerly awaiting the report by the Senate committee handling the probe as well as from the Ministry of Finance.
He said: “We will deal with any bank that is found culpable in the on-going probe of the pension scam. I have been talking with the Minister of Finance, Dr. Ngozi Okonjo-Iweala, on the issue, and we will wait for the report from the ministry. I assure that we will punish any bank involved in the pension fraud.”
MPC retains MPR at 12%
Speaking on decisions by the Monetary Policy Committee meeting, Sanusi revealed that the MPC has decided to retain the Monetary Policy Rate (MPR) at 12 per cent and CRR at 8.0 per cent.
The committee, he noted, will also retain the Minimum Liquidity Ratio of 30 per cent, adding that it will watch developments with respect to the fiscal stance and to respond appropriately if and when the need arises.
Moderation in govt borrowing
Meanwhile, Sanusi has called for tightening of fiscal policies and moderation in borrowing by government.
He said the committee was concerned about the rising level of domestic debt and its sustainability, as shown by the average debt service to revenue ratio of 17.6 per cent in the last three years, adding that this would likely have a negative impact on domestic interest rates and the flow of credit to the core private sector, among others.
According to Sanusi, “although debt to GDP ratio in 2011 stood at 17.8 per cent, the committee noted that the percentage of debt service to government revenue was high at 19.1 per cent in the same year. In view of the high interest rate environment occasioned by tight monetary policy stance, a moderation in government borrowing would be positive not just for the fiscal position but for access to finance by private sector.”
He said after reviewing the overall fiscal position, the committee commended the fiscal authorities for the discipline being introduced into government spending, the tightening of fiscal controls and the renewed focus on spending on capital projects.
He said: “The committee recognised that in the light of increasingly benign global environment, it is imperative to ensure that the current growth path is sustained. It noted the relative stability in the foreign exchange market as well as the modest accretion to the external reserves during the period.
“In view of the accretion to reserves in 2011 and the need to continue to build buffers for the economy in an uncertain environment, the committee strongly endorsed the stance of the bank to focus on building reserves, defending the stability of the currency and providing conditions that are conducive to the inflow of FDI.”
Fiscal and structural measures
He further noted that the introduction of some fiscal and structural measures, including introduction of cost-reflective tariffs and progress in agricultural transformation initiatives, could improve the revenue base of the government as well as enhance the capacity of the domestic economy to improve the value-chain in the production process.
Sanusi said: “Although these measures would have a salutary effect on the fiscal position, they may, in the short run, put pressure on domestic prices. Consequently, it is important for both monetary and fiscal authorities to put in place coordinated measures that would moderate the increase in general level of domestic prices in the short to medium term.”
Sanusi observed that the outlook of the international environment had improved slightly, when compared with 2011, adding: “The US economy is showing signs of recovery and is expected to post over two per cent growth in 2012 compared with 1.7 per cent in 2011.
“There are, however, lingering global security concerns, particularly with respect to the face-off between the Iranian authorities on the one hand and the governments of US, Europe and Israel on the other hand. An escalation of conflict may threaten global energy supplies and introduce shocks into the current environment.”
