In this report, DAMILOLA AINA examines the various reforms introduced by the Central Bank of Nigeria Governor, Olayemi Cardoso, to reflate the economy

Since assuming office on October 5, 2023, the Governor of the Central Bank of Nigeria, Olayemi Cardoso, has been making various efforts to stabilise the economy and tame accelerating inflation.

Unveiling his policy mandate at the Chartered Institute of Bankers of Nigeria’s 58th Annual Bankers’ Dinner and Grand Finale of the Institute’s 60th anniversary held in Lagos last year, Cardoso reeled out his plans to strengthen investors’ confidence, attract capital inflows, stimulate domestic investment, and ultimately improve the level of external reserves.

One of the challenges that Cardoso promised to address was the issue of foreign exchange backlogs. The CBN was owing investors over $7bn in unmet forex demand, which made the likes of Emirate Airlines suspend their operations in the country.

As of January, the CBN announced that it had cleared $2bn of the forex backlog, and paid $61.64m to foreign airlines operating in the country from their trapped funds.

On Thursday, Cardoso disclosed that the apex bank had cleared verified forex backlogs in all the banks except five of them.

“Basically, what we have done with those is that we have paid as much as we can to the point where we have cleared the backlog of all the banks save five. All the banks’ genuine and verifiable backlogs have been cleared, save five.

“We are confident that we will shortly be in a position where the whole issue of forwards would be behind us. I would say in the next few days we should be in a position where the balance of the five would have been put behind us,” he stated during an investor call facilitated by the Nigerian Exchange Group.

This is beginning to restore investors’ confidence as the forex market is beginning to enjoy relative stability, having suffered increased pressure in January. The naira weakened to an all-time low of 1,574.62/$ at the Nigerian Autonomous Foreign Exchange Market on February 19. But it has recovered and strengthened to 1,561.01/$ as of Tuesday.

The apex bank governor also revealed that the country had attracted $2bn foreign portfolio inflows this year.

Under Cardoso, there has been an alignment in fiscal and monetary policies, which has reduced policy somersault.  This alignment is seen as a positive development, as it enhances the effectiveness of policy measures, promotes transparency, and strengthens the overall resilience of Nigeria’s economic framework.

The CBN, as the country’s primary financial regulatory authority, plays a pivotal role in shaping the nation’s economic landscape. In its continuous efforts to maintain monetary stability and foster economic growth, the CBN recently convened its latest Monetary Policy Meeting.

The crucial gathering serves as a platform for the governor and other committee members to deliberate on the current economic conditions, assess key indicators, and make decisions regarding interest rates, liquidity, and other monetary measures.

The outcomes of such meetings have significant implications for Nigeria’s financial markets, influencing borrowing costs, inflation rates, and overall economic stability.

https://punchng.com/cbn-initiates-reforms-to-combat-soaring-inflation-reflate-economy/