Nigeria: New CBN Governor Cardoso Aims to Tackle Dollar Debts and Revisit Monetary Policies

Olayemi Cardoso, the recently appointed Governor of the Central Bank of Nigeria (CBN), has outlined his agenda, which includes addressing the CBN’s unsettled foreign exchange obligations and reevaluating monetary policies.

During a screening session in the Senate, Cardoso emphasized several key points:

1. Clearing Dollar Debts: Cardoso prioritizes clearing the CBN’s backlog of unsettled foreign exchange obligations, emphasizing that this issue must be promptly addressed to make significant progress in the foreign exchange market.
2. Enhancing Transparency and Corporate Governance: The new CBN governor aims to enhance transparency, corporate governance, and confidence in the autonomy and integrity of the bank.
3. Stabilizing the Naira: To stabilize the country’s currency, Cardoso plans to revert to evidence-based monetary policies and discontinue his predecessor’s unorthodox monetary policies.
4. Inflation Management: The CBN will adopt evidence-based policies to tackle inflation, which surged to 25.80% in August 2023. Cardoso emphasizes the importance of making data-driven decisions.
5. Deficit Financing: Cardoso acknowledges that a significant portion of inflation in Nigeria results from money supply and deficit financing. He intends to ensure that deficit financing is no longer a problem for the country.
6. Restructuring Development Financing: The new CBN governor advocates for moving the CBN away from direct development finance interventions and instead focusing on a limited advisory role that supports economic growth.
7. Financial System Stability: Cardoso recognizes the importance of financial system stability and aims to review mechanisms that are currently working.
8. Collaboration and Compliance: He pledges to collaborate with stakeholders and instill a culture of compliance within the CBN.
9. Foreign Exchange Market: Cardoso seeks to address foreign exchange market access and price discovery issues. He plans to determine the CBN’s role in the foreign exchange market and explore mechanisms for rate unification.
10. Economic Policy Targets: The new governor acknowledges the administration’s economic policy proposals, which aim to achieve a $1 trillion GDP within eight years. He emphasizes that achieving these targets is critical for economic stability.
11. Adherence to CBN Act: Cardoso commits to strictly adhering to the CBN Act of 2007.

Cardoso’s appointment comes at a time when Nigeria faces economic challenges, including a depreciating Naira. His agenda reflects a commitment to addressing these challenges, improving transparency, and promoting sound monetary policies.