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Fuel price hike sparked inflation, CBN admits

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By Aminu Imam & Abdulwahab Isa

The Central Bank of Nigeria (CBN) Governor, Sanusi     Lamido Sanusi, yesterday, admitted that the resurgence of inflationary threat to the nation’s economy came from higher fuel prices.
The apex bank boss made the submission at the 82nd Monetary Policy Committee (MPC) meeting of the CBN which ended yesterday in Abuja.
The MPC noted a “resurgence of an inflationary threat to the economy” from higher fuel prices, amongst other things.
But he said February inflation had been moderated by several factors, including “a re-allocation of spending by consumers caused by a rise in fuel prices (in January)” and “a slowdown in fiscal spending and ... strengthening of the naira.”
Nigeria’s inflation rate eased in February as the removal of fuel subsidies had a more muted impact on prices than forecast, official figures showed yesterday.
Also, the CBN has threatened to sanction any bank found culpable in the on-going pension verification scam which was revealed during the National Assembly’s recent public hearing on pension administration in the country where it was established that large scale corruption were perpetuated by many officers designated to handle its disbursement. Some commercial banks allegedly played a role in the scam.
During a question and answer session from journalists after the MPC meeting, Sanusi said a team of bank examiners will soon be mobilised to scrutinise the books of the banks, with a view to ascertaining the involvement of culpable ones.
“We will send our examiners and any bank that we find involved in the pension scam will be dealt with. So far, we have heard the Ministry of Finance presentation, but we’ve not received a formal report; we’ve asked for it. I’ve held discussion with Finance Minister and I’ve told her”, he stated.
Meanwhile, the MPC also unanimously resolved yesterday to retain the Monetary Policy Rate (MPR), the anchor lending rate to banks at 12 percent with an interest rate corridor at +/-200 basis point.
In retaining MPR at 12 percent, Sanusi said MPC had taken into account clear impact of previous tightening on the rate of inflation and exchange rate which has impacted positively on the economy. Other key decisions reached by MPC were, adoption to retain Cash Reserve Ratio (CRR) at 8 percent, and minimum liquidity ratio at 30 percent.
Curiously, the committee has expressed deep concern on high level of domestic debt, a sentiment similarly raised last week by authorities at the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), when it appeared before the National Assembly.
The MPC while raising concern about the rising level of domestic debt and its sustainability which showed an average debt service to a revenue ration of 17.6 percent in the last three years, noted that the trend if unchecked, could have a negative impact on domestic interest rates as well as impacting negatively the flow of credit to the core private sector.

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Sanusi-CBN Statury-Failure!
written by Dr Pat Kolawole Awosan, March 21, 2012
In civilise society,the governor of CBN would voluntarily have resign from office as governor of CBN for his failure to use his position to influence the economic-policy of president Ebele Jonathan which would have prevented current economic downturn and worse-economic configuration foisted on poor citizenry of Nigeria as a result of Jonathan anti-Nigerians fuel-price sudden increase which welcomed average Nigerians into debllitating social-economic biting situations the nation's masses are presently experiencing.There's no relief for the average citizens.Things will continue to slide deeper down the social economic trend and poverty stricken class of Nigerians grow deeper.There's no way round the impoverishment Jonathan fuel price increase have thrown the masses deliberately without foresight and caring heart.Jonathan's shot himself on foot!His fincnace minister,Dr Ngozi Okonjo-Iweala representing IMF/WB could resign to take up a new job that pay highier salary and allowance back with the Western nations secret agents-IMF/WB that originally sent her to implement its script which imposed impoverishment on Nigerians. Dr Pat Kolawole Awosan,Canada.

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