Central Bank Governor Sanusi Lamido Sanusi yesterday in Washington DC said that by the end of September this year, all the banks in the country would be fully capitalized and that the non performing loans of all the banks in the country would have been reduced to 5 per cent.
Speaking at a seminar on Beyond the Banking reforms put together by Thisday newspaper at the ongoing IMF/World Bank meeting, he said that beyond the resolution of the banking crisis is the challenge of pushing hot money into the economy that would put pressure on prices and the eventual general increase the prices of goods and services in the country.
According to him, the Asset Management Company of Nigeria AMCON has rescued banks to the tune of N3 trillion at a time the federal government embarked on expansionary fiscal policies. He said spending from government quarters and banks lending will result in excess liquidity in the economy that will lead to inflation and rising interest rate. He said though the ministry of Finance and has plans to reign in government spending, it can only come be realized in the medium to long term. He said in practice fiscal retrenchment cannot hold in the short term.
According to him the monetary authority has been battling with excess liquidity which is causing inflation, and undue pressure on the exchange rate of the naira and interest rates. He said that subsidy removal though desirable will pose a great challenge to monetary policy authority because in the short run the immediate impact of the removal will be on prices of goods and services. This he said has the potential of pushing up prices of goods and services in the country. He said in the interest of the economy and the nation there is the urgent need for greater collaboration and coordination between fiscal and monetary authorities to deliver better policies to move the economy forward.
Giving insights into the transformation agenda of the Jonathan administration,
And in a bid to halt policy inconsistencies, the Finance Minister and Coordinator of the Economy, Ngozi Okonjo-Iweala, said the private sector will no longer be allowed individual concession from the president. “All those who usually go to see the President at night will longer be allowed to do so. If they have any proposal, it must be presented to the Economic Team.
“ We are also going to hold a retreat with the private sector to discuss policy inconsistencies caused by the pressure they exert on the government,” she said. The Finance Minster also said her ministry would tackle corruption at the port by reducing the number of agencies from 14 to four.
Her ministry she said was working with the CBN to create a mortgage finance that will enable people to own houses, stressing that this will also create jobs.
She said banking constraints are being sorted out and those institutions that will unleash the banking sector are being looked into. “Our goal is to ne among the top reformer in doing business by next year,” she said.
Speaking at the forum Dr. Obiageli Ezekwesili, Vice President for the World Bank’s Africa Region, harped on the need for the Nigerian financial system to transit to the International Financial Reporting Standard (IFRS) in a bid to ensure transparency, which is one of the critical factors that attracts foreign investors.
Besides, she the financial sector has to improve creditor right; expand credit information beyond the banks; reform the judicial system, the bankruptcy as well as the financial laws.
The World Bank boss also stressed the need for the CBN to clarify the role of the Asset Management Corporation (AMCON).
On the economy, she said Nigeria has to take a “very tough reforms” and has to prove that its reform programmes are benefiting the poor.
She insisted that Nigeria’s fiscal expansion over the years have not deliver quality expenditure. “The growth of 5.7 per cent annually did not benefit many Nigerians. About nine to 10 million Africans have joined the jobless market and Nigeria with its huge population accounts for a major proportion,” she said.
To make the ongoing reforms succeed, she said there was a need for political support, stressing that the World Bank stands ready to support Nigeria’s reform process.
