Economists, others seek full autonomous status for CBN

Economists and other financial experts at the ongoing 54th annual conference of the Nigerian Economic Society (NES) have opposed moves of subjecting the annual budget of the Central Bank of Nigeria (CBN) to legislative appropriation.

The experts hinged their position on the fact of the uncertainty and delicate nature of monetary operations of apex banks across the world, which cannot be left to political dictates.

Participants at the NES conference in a lead paper tittled “Central Bank Autonomy, Accountability and Governance: Issues, Challenges and option’’ presented by Ademola Oyejide, an Emeritus Professor of University of Ibadan, believe that tinkering with the autonomy of the CBN would be counter-productive for the nation’s economy and sustainable national development.

In his presentation, Oyejide explained that the concept of central bank’s autonomy became an issue due to the spiral inflationary trend of the 1970 and 1980s in the United States and Western European market economies. He stated that a central bank’s autonomy therefore became not only theoretically desirable but had proved to be an effective mechanism of ensuring price stability or low inflationary macroeconomic management in the face of fiscal rascality being exhibited by political authorities.

The renowned economist therefore warned that the issue of ensuring an autonomous CBN was even more imperative considering its developmental function being a central bank of a developing economy.

While acknowledging that right now there are many roles set for the CBN, which may no longer be relevant for it to continue to play if it’s going to be autonomous in the monetary policy making process, Oyejide advocated that the apex bank must be shielded from all political interference as he urged government to strengthen the country’s development institutions to be able carry out developmental roles effectively.

In his contributions, Sam Olofin, a seasoned economist and university don, posited that the issue of CBN autonomy was better appreciated when the operations of other central banks across the world are looked into, citing the example of Zimbabwean economy, which crashed at some point since its central bank lacked the required autonomy to wade off all political interferences

He said: “Nobody wants the Nigerian economy to go the way of the economy of Zimbabwe where the central bank is under the direct control of the presidency and they had to abandon their currency when the rate of inflation skyrocketed” The university don explained that there were very few countries where the kind of control that is being proposed by the Legislature for the central bank is practised “The best practice is for the Central Bank to be autonomous in the sense that its monetary policy is not controlled by the fiscal authorities by the ministry of finance, its budget is approved by the board on behalf of the government which approves the board by the way”, Olofin said.

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