The International Monetary Fund (IMF) has warned that the ongoing amendment to the Central Bank of Nigeria (CBN) Act would weaken the apex bank’s autonomy.
The IMF gave the warning in its report on Article IV consultation with Nigeria released on Thursday.
The Bretton Wood institution, however, commended the government’s efforts at checking the inflation and restoring market confidence.
It also noted the importance of sustaining the current tight monetary policy stance to put prices on a downward path; maintaining exchange rate flexibility; and building reserves.
It would be recalled that a bill to amend the CBN 2007 Act 2007 passed second reading at the Senate in February.
The bill particularly seeks to limit the tenure of the CBN governor to a single non-renewal tenure of six years; the establishment of a committee to coordinate monetary and fiscal policies; subject the CBN budget to NASS approval, publication of its policies; a change in the leadership of the bank’s board of governors, increase loan advances to federal government from 5% to 10%; among others.
But in the report, the IMF urged caution, saying that such a move could hamper the apex bank’s independence and harm monetary policy management.
“Directors supported the authorities’ intentions to shift to an inflation targeting regime and recommended strengthening central bank independence and communication to ensure a successful transition.
“They recommended caution regarding amendments to the Central Bank of Nigeria (CBN) Act that might weaken the central bank’s autonomy. They encouraged further progress in implementing the outstanding recommendations from the 2021 safeguards assessment,” it stated.
By: Babajide Okeowo
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