NIGERIA ECONOMY IS IN DANGER WITHOUT CBN AUTONOMY SAID.....SANUSI

Governor of the Central Bank of Nigeria (CBN) Mr. Lamido Sanusi, said
on Thursday that Nigeria's economy would be imperiled if the bank
loses its hard-won independence.
The governor who has just five months left in office has been facing
challenging times since leaked letter to President Jonathan alleging
that the Nigeria National Petroleum Corporation had diverted about $50
billion between January 2012 and 2013.
Reports indicate that President Jonathan had recently phoned him to
resign from his position following the tardy report on the NNPC, which
the presidency said he should have properly investigated before coming
up with an allegation of diversion of such huge amount of money.
According to the report, the governor refused to resign insitinsting
on staying out his tenure. He cited the protection he enjoys under CBN
act, which stipulates that the governor could only be removed by
two-third majority of the National Assembly.
Another report on Tuesday said that the governor had been queried by
President Jonathan of over politically-tinged lavish donations amount
to about N150 billion.
Sanusi, in an interview with Bloomberg Television Africa on the
sidelines of the World Economic Forum in Davos, Switzerland, said
maintaining the independence of the bank would be a major challenge
that his successor would have to contend with.
According to him, it is important for a strong individual to be
appointed to head the bank, due to the critical role it plays in the
development of the country.
He said, 'Any undermining of the CBN's independence may hurt the
economy. If anyone tampers with it, the markets would punish the
economy.
'The CBN is a very strong institution that needs a strong leader and I
think one of the things we have achieved over the last four or five
years is to show that we can have an independent Central Bank in
Africa.
'It is extremely important from the fiscal side, it is extremely
important from the governance side, that the governor of the Central
Bank is able to speak independently of political authority and raise
an alarm and concerns, and give constructive criticism and advice.'
Critics however believe that Sanusi had been too garrulous for the
respected office of the CBN governor, especially dabbling into issues
that do not bear direct relevant to his job as the central bank
governor.
Speaking in another interview, this time withReuters, Sanusi ruled out
further devaluation of the currency.
He said that t the apex bank would continue to pursue a stable
exchange rate policy as long as the foreign reserves can support.
The governor is however concerned about Nigeria's dwindling Excess
Crude Account, which he believes may hamstring its ability to
successfully protect the naira.
A stable currency, he said, is absolutely critical for price
stability and financial stability in general, adding that it is not in
the interest of the country to devalue the naira, because it will not
have impact on the country's current account balance, given the highly
inelastic nature of imports and the dominance of oil.
According to the CBN boss, Excess Crude Account has gone down to
just $2.5 billion, compared with $11.5 billion a year ago, noting that
until it is replenished there would be little room for a reduction in
the Monetary Policy Rate, MPR, below the current 12 per cent
benchmark.
He said: 'We should continue to seek a stable exchange rate for as
long as the reserves and monetary conditions can support this.'
Sanusi said he has no fears of tightening monetary policy further to
keep inflation down and to stabilize the currency, noting that, if
needed, the CBN will increase its Monetary Policy Rate from 12 per
cent and the Cash Reserve Requirement on public sector funds to 100
per cent.
He added that: 'I don't think we are at the end of possible tightening
cycles, but I do think that the scope for further tightening is
getting narrower and narrower. We do need to rely more on other
instruments.'
He said the CBN will maintain inflation within a band of six per cent
to nine per cent this year, controlled majorly by monetary conditions.
He said, 'Government spending has not been huge, the real challenge
has been on the revenue side and on the foreign exchange side. I see
no reason why from 2015, Nigeria cannot move to within the range of
South Africa's three percent to six percent, or four percent to seven
percent for inflation.'
In reference to his relationship with the president, the Kano-born
banker said he was unconcerned by personal relationships.
'We meet at work and people should do their job. I do hope that the
president will be happy if I do the job very well,' he said.
Sanusi had over the years as CBN Governor, made a number of
controversial statements, drawing the ire of the members of the
National Assembly and the executive arm of government.