(NIGERIA) – Newly Appointed CBN Governor Olayemi Cardoso Pledges to Address Forex Obligations and Inflation
During his recent confirmation hearing with the Senate, Olayemi Cardoso, the newly appointed Governor of the Central Bank of Nigeria (CBN), outlined his immediate priorities to stabilize the nation’s financial landscape.
Foremost among his goals is addressing the backlog of unsettled foreign exchange obligations held by the CBN. Cardoso stressed the importance of resolving this issue promptly, recognizing its significance in restoring stability to the forex market.
CBN governor unveils ambitious plan
In addition to clearing these financial obligations, Cardoso aims to introduce greater transparency, strengthen corporate governance, and instill confidence in the autonomy and integrity of the central bank.
Cardoso’s commitment extends to maintaining price stability, adopting evidence-based monetary policies, and discontinuing unconventional monetary measures implemented by his predecessor, all aimed at fortifying the Nigerian naira.
This announcement comes amid growing economic challenges, as the naira’s value continues to approach N1,000 to the dollar in the parallel market.
The official market closed with a naira-to-dollar exchange rate of N755.08/$1 on the day of Cardoso’s statement.
To stabilize the naira, Cardoso plans to settle existing financial obligations within the CBN and establish transparent rules for the forex market.
Addressing what he terms an ‘operational issue,’ he emphasized the need to verify the authenticity and extent of these obligations, which could range from $4 billion to $7 billion.
Cardoso highlighted a system-related challenge, emphasizing the importance of developing open and transparent rules that all market participants can understand. He believes that attracting foreign investors and portfolio investors requires a clear and comprehensible system.
On the issue of inflation, Cardoso is determined to implement evidence-based monetary policies. He emphasized the importance of data collection and analysis to make informed decisions, especially given Nigeria’s rising inflation rate, which reached 25.80% in August 2023.
While the CBN initiated a tightening cycle in May 2022, raising the benchmark interest rate to 18.75% in July, it has struggled to contain inflation effectively.
Cardoso recognized that inflation, to a significant extent, results from money supply and deficit financing, and he pledged to address these issues effectively.
Cardoso’s vision for the CBN also includes restoring the bank’s independence and credibility by refocusing on its core mandate and ensuring a culture of compliance. He expressed concern about the blurred lines between monetary policy and fiscal intervention, calling for the CBN to shift from direct development finance interventions to advisory roles that support economic growth.
As the new CBN governor, Cardoso aims to discharge his responsibilities with a strong sense of trust, emphasizing the importance of the position and the responsibility it carries.