In my honest opinion it was a modest outing. The senators once again betrayed the expectations of Nigerians with the type of questions asked and the manner in which they were asked.
If there was a time to really grill an appointee on substance , today was the day, but our senators said NO. Beyond that, let me talk about some of the highlights of the screening for me.
On the independence of CBN- Mr Cardoso was very vocal, and tried to dispel any fears on the issue. He said he will ensure CBN’s independence while also respecting the oversight functions of the executive and Senate.
He also said CBN will fully comply with the CBN act and will always make himself available to the senate if the need arises.
On Forex issue: he alluded to two major problems that can help solve the current problem and increase inflow in the short term. One being, the forex owed by the CBN( operational problem) and also the other being systematic policies governing forex management.
He promised to sort out the debt as soon as the claims are verified. He also promised to bring out holistic polices to help govern forex management.
On inflation: This to me was the best part of the interview and brought smiles to my face. I had written a thread where I called Mr Cardoso a “data man” because of his avowed leanings towards comprehensive data to make informed decision.
Cardoso brought this to the fore by correctly naming the causes of our inflation.
He talked about energy issues(fuel importation), shortage of food produce( be it artificial or quantitative ) and Deficit financing( budget deficit) leading to excess money in circulation.
Let me touch on the last point of deficit financing. I remember I did a thread months ago highlighting the dangers of cyclical budget deficit(I will attach the thread below). I argued that for Nigeria to have low inflation, we need naira stability and for naira to be stable we need a balanced budget at the very least. I buttressed my points with verifiable data that showed the relationship between budget deficit in Nigeria and high inflation.
I recommended that PBAT must pursue a holistic approach to our fiscal issues. We must ensure to make whatever money we wish to spend. I am happy Cardoso seem to be on the same page. After running cyclical budget deficit funded by ways and means here is the result -: we have N4.6 trillion “chasing” dollar, Out of which N2.2 trillion is outside the banking system and beyond CBN and monetary policy control. Cardoso biggest headache must be how to reduce the N2.4 trillion within the banking system where also recouping most of the N2.2 trillion outside the banking system.
I know Nigerians don’t want to here this but this is where the naira redesign policy comes in. Will Cardoso be bold enough to initiate another naira redesign policy albeit in a seemless manner?
Other tools to reduce money in circulation like selling securities and hiking interest rate may only help reduce money within the banking system, how do we deal with the N2.2 trillion outside the banking system?.
On the co mingling of Fiscal policy and monetary policy ;- Mr Cardoso said CBN will play just an advisory role and help serve as a conduit for implementation. Unlike what was obtainable in the past, where CBN was the one to initiate fiscal policies and implement( e.g Anchor borrowers program), what he promised is that the finance ministry will initiate the policies and mobilize funds( although funds can be through CBN) while CBN will play an advisory role and help to disburse the funds, monitor and evaluate progress.
Other highlights -: He talked about potentially rebasing the economy after financial inclusion of the informal sector. He talked about strengthening the data infrastructure of the CBN to help CBN make better decisions. He talked about carrying stakeholders along and getting feedback
I wish Mr Yemi Cardoso and his team huge success. May Nigeria succeed.
Credit to: OPEOLUWA On twitter/X @OpeBee