BUHARI SECRETLY ORDERED CBN TO PRINT N500BILLION TO CURB EFFECT OF RECESSION

 

The Central Bank of Nigeria (CBN) recently printed and injected N500b into the Nigerian economy, our investigations can exclusively reveal. This is despite concerns that such a move will only fuel inflation in the Country.

Our source, a Director at CBN who asked not to be named, indicated that the move was initiated by the Buhari administration to combat the liquidity crunch currently plaguing the country.

“The money was printed and used in purchasing a number of government bonds. It is part of a test phase for a government policy to stimulate the economy. By buying up government/corporate bonds, CBN aims to increase the value of the bonds while keeping long term interest rates down.” he said.

“This would make more money available to private banks, who would then be able to loan money at lower interest rates.” he added.

However, our source went on to say that this policy runs the risk of making inflation worse. “Everyone knows that the Nigerian Bureau of Statistics (NBS) puts the inflation rate at 18.3% as at end of October 2016. Such a policy runs the risk of spiking inflation even further.”

He refused to give a definitive answer as to whether the policy would be successful or would lead to greater economic challenges.

An analysis by our in-house economic team raised concerns about the ability of the current administration to implement such a risky policy successfully. Of particular concern was the ability of the government to mop up such excess funds if the economy recovers.

Our economic analysts also raised fundamental concerns about the ability of the government to implement such a high risk policy without negative consequences knowing that such a policy would require attention to detail, firm and speedy decision making, and economic nous the sort of which the administration has not yet displayed in its management of the Nigerian economy.

They referred to the collapse of economies in Venezuela, Zimbabwe and Uganda during the tenure of the dictator – Idi Amin Dada as evidence of how the implementation of such a policy could destroy an economy. - LNg