Economy
Money printing controversy rages on
By AYOOLA OLAOLUWA
The war of words between Governor Godwin Obaseki of Edo State and the Federal Government over the governor’s revelation that the Central Bank of Nigeria (CBN) had been printing tons of naira to help stabilize the nation’s economy has escalated, with the federal government directing the CBN to start deducting billions of naira it gave to states during the 2015/2016 financial crisis as budget support facilities.
It would be recalled that Governor Obaseki, while speaking recently at the Edo State Transition Committee Stakeholders Engagement in Benin, the state capital, revealed that Nigeria is in huge financial trouble and that the federal government, owing to non-availability of funds, had been printing naira non-stop to help stabilize the nation’s economy and keep the federal, states and local governments afloat.
He added that in the month of March 2021, the CBN printed N60 billion to augment federal allocation shared by the FG, states, and local governments for the month of March 2021.
“Nigeria has changed. The economy of Nigeria is not the same again whether we like it or not. Since the civil war, we have been managing, saying ‘money is not our problem as long as we are pumping crude oil everyday’.
“So we have run a very strange economy and strange presidential system where the local, state and federal government, at the end of the month, go and earn salary. We are the only country in the world that does that.
“Everywhere else, government relies on the people to produce taxes and that is what they use to run the local government, state and the federation.
“But with the way we run Nigeria, the country can go to sleep. At the end of the month, we just go to Abuja, collect money and we come back to spend. We are in trouble, huge financial trouble.
“The current price of crude oil is only a mirage. The major oil companies who are the ones producing are no longer investing much in oil. Shell is pulling out of Nigeria and Chevron is now one of the world’s largest investors in alternative fuel, so in another year or so, where will we find this money that we go to share in Abuja?
“When we got FAAC for March, the federal government printed additional N50-N60 billion to top-up for us to share. This April, we will go to Abuja and share.
“By the end of this year, our total borrowings are going to be within N15-N16 trillion. Imagine a family that is just borrowing without any means to pay back and nobody is looking at that, everybody is looking at 2023, everybody is blaming Mr. President as if he is a magician”, Obaseki lamented.
The revelation sparked criticisms from many quarters, with many economist and financial experts warning that the CBN was lending too much to the government and that the action will have inflationary implication on the economy.
Shocked by the negative reactions generated by the revelation, the Minister of Finance, Budget and National Planning, Hajia Zainab Ahmed, who had earlier revealed at the public presentation of the approved 2021 budget in January that the CBN made available ₦2.86 trillion in 2020 to the federal government, referred to Obaseki’s claim as very sad and untrue.
Ahmed insisted that FAAC allocation was sourced from revenues from different agencies of the federal government.
“What we distribute at FAAC is revenue that is generated and in fact distribution revenue is public information. We publish revenue generated by FIRS, the Customs and the NNPC and we distribute at FAAC. So, it is not true to say we printed money to distribute at FAAC, it is not true”, Ahmed complained.
But rather than recanting his statement, Obaseki doubled-down on it, advising the finance minister to rally Nigerians to stem the obvious fiscal slide facing the country.
“While we do not want to join issues with the @FinMinNigeria , we believe it is our duty to offer useful advice for the benefit of our country. The Minister of Finance, Budget and National Planning, @ZShamsuna should rally Nigerians to stem the obvious fiscal slide facing our country.
“Rather than play the Ostrich, we urge the government to take urgent steps to end the current monetary rascality, so as to prevent the prevailing economic challenge from degenerating further.
“We believe it is imperative to approach the Nigerian project with all sense of responsibility and commitment and not play to the gallery because ultimately, time shall be the judge of us all”, Obaseki had fired back.
Rather than abate, the brickbats however, worsened at the weekend with the federal government directing the CBN to start deducting the funds it gave the states as budget support facilities during the 2015/2016 financial crisis.
Speaking at the weekend, CBN governor, Mr. Godwin Emefiele, who did not refute the allegation, only sought to be exonerated from political issues and cautioned that he should be allowed to do his job which is helping the government to achieve its objectives. He however, threatened to begin deducting the budget support fund given to states in 2015.
Business Hallmark reliably gathered from impeccable sources in the ministry of finance that the federal government felt betrayed by the revelation by Obaseki, and the decision of other state governors to either remain silent, or subtly support the Edo governor.
According to one of the sources who did not want his identity in print for fear of victimisation, the revelation by the Edo governor came as a rude shock to some powerful people in government who felt betrayed by a beneficiary of the money printing spree.
“The government is not particularly bothered about the revelation, but with the messenger. Being a beneficiary of the funds being provided by the CBN, the thinking is that Obaseki, as well as all other state governors should not be the ones publicly speaking against the policy.
“State governors are the ones putting pressure on the federal to allocate them more money. Where do they think the money is coming from? Quantitative easing of course! They can’t take the money with one hand and then go ahead to question its source. That is the grouse of government with Obaseki and some of the governor’s supporting him”, the source explained.
Another top official of the ministry of finance also informed our correspondent that the Presidency is angry with Governor Obaseki and has informed the ministry to suspend all pending financial supports meant for states as well as state the process of recovering all loans given to States as budget support.
“I am aware that the instruction to start the deductions of the loans from the month of April has been given to the CBN. What I don’t know is if the government is really serious with the order or just to harass the governors a bit”, the source stated.
CBN Governor, Godwin Obaseki, while speaking at the weekend, told Obaseki to stop playing politics with the nation’s fiscal and monetary policies, warning that the bank is left with no other option than to insist on states paying back the loans.
“It is very inappropriate for people to just give some colouration to the word printing of money as if it is some foreign word coming from the sky.
“It is important for me to put it this way: The situation we find ourselves now is even worse than what we faced in 2015/2016, when we did provide budget support facilities for all the states in this country. That loan remains unpaid till now.
“And we are going to insist on paying back those monies going forward, since they are accusing us of giving them loans, effectively that’s what they are saying.
While explaining that the act of bailing out the federal government by the CBN is not peculiar to Nigeria, Emefiele said: “Most countries in the world are confronted by health challenges coming from the pandemic, economic crisis and the rest of them. It will be irresponsible for the central bank of Nigeria or any central bank or any Fed to stand idle and refuse to support its government at this time.
“What is being done is being done in any clime. Nigeria is unfortunately in a very bad situation. I’m not going to pretend about it, in the sense that we are facing problems about productivity output which is GDP; we are also confronted with issues of inflation and prices and the rest of them.
While not mentioning names, but subtly referring to the Edo governor and others, the CBN governor warned politicians to keep their politics away from monetary policies.
“For us to begin to see some people playing games trying to overheat the polity by talking about printing of money is unacceptable. I think it is very unfortunate and totally inappropriate and I would like to advise that this should stop. We should all work for the growth of our country and not play politics.
“I am not a politician and I keep saying so. I am a banker and I should be left to do my work,” Emefiele warned.
