Professor Uche Chibuike, a member of the monetary policy committee(MPC) of the Central Bank of Nigeria (CBN) has frowned at the whopping N701 billion which the Federal Executive Council had mandated the CBN to fund the power sector with, saying that it will impact on the health of Nigeria’s banking system.
According to him, “such a huge injection will impact on the health of our banking system which is currently struggling under the current harsh economic environment. With aggregate bank NPLs already in double digit territory, we should all join hands to ensure that policies and directives that are bound to unnecessarily put pressure on interest and exchange rates are avoided.”
In the recently released personal statements of MPC members, Chibuike Nigeria cannot at the present time afford another banking crisis. This is even more so given the fact that the fallouts of the last one are yet to be satisfactorily resolved he stated.
He said that the Nigerian Electricity Regulatory Commission (NERC) has already made it clear that the approved intervention fund will not be sufficient. Furthermore, the schism between the electricity distribution companies and the Federal Ministry of Power, Works and Housing over the nature and structure of debts owned has continued to widen, at least in the public space.
Based on the above, the Chibuike noted that it is safe to predict that the said intervention fund, like the first one, is unlikely to meaningfully address the problems of the power sector. Intervention pressures for the power sector, if unchecked, can thus only increase in the future.
“It is however important to reiterate that such interventions can only worsen our very fragile monetary policy environment. An injection of such high powered money into our economy will definitely impact inflation.
“It will also impact the exchange rate of the Naira. Aside from the above, I will like to emphasise that it is important for the CBN to check whether it indeed has the powers to do what it has been asked to do in a country where all appropriations are supposed to be sanctioned by the National Assembly,” he stressed.
Source: Nigerian Tribune