African Reserves

Nigeria: Faced with massive financing of government deficits, the CBN refuses to publish its annual reports

The Central Bank of Nigeria has not made its annual reports public since 2018, a move analysts say is aimed at covering up mismanagement at the biggest bank.

In clear violation of its own laws, the Central Bank of Nigeria (CBN) has repeatedly failed to publish its annual reports detailing its operations and financial obligations.

Since 2005, when it started publishing details of its annual report on its website, the CBN never failed to publish the report until 2018, when it stopped publishing crucial documents.

According to the CBN Act 2007, the apex bank should publish its report within two months of the end of each financial year.

“The Bank must, within two months of the end of each financial year, transmit to the National Assembly and to the President a copy of its annual accounts certified by the auditor”, reads in part the CBN law.

“A report to be submitted to the National Assembly and to the President shall be published by the Bank in such manner as the Governor may direct.

“The Council shall ensure that the accounts submitted under this article are published as soon as possible in the Official Journal.

“The Bank will publish, as soon as possible after the last day of each month-end, a statement of its assets and liabilities at the close of business on that day, or if that day is a public holiday, at the close of business on last previous business day,” reads the Act.

Analysts say the CBN’s failure to release the report could send the wrong signals to investors and others interested in understanding the state of the economy.

In recent years, the CBN has come under criticism over the management of the country’s economy.

Amid soaring food prices and other inflationary pressures, the apex bank has kept the country’s interest rate at 11.5% since September 2020, when the CBN cut the monetary policy rate by 12, 5%.

The bank also struggled to provide liquidity amid depleted reserves. He has also been criticized for his handling of the naira and his controversial financing of federal government deficits.

Paul Alaje, an economist and political analyst, said no one knows what the CBN’s intention is, but publishing the annual reports would have helped the country know its fiscal situation.

According to him, although some suggestions are left out of monetary policy meetings, the report will be useful for those who want to do more research.

“It also sets our country back because if we don’t know what can be achieved in the past, we may not know what kind of policy to apply in the future,” he said.

“Make the report public except and unless the CBN says there was no activity within the institution during the time period.”

The bank did not respond to an FOI filed by PREMIUM TIMES requesting details of annual reports. His spokesperson, Osita Nwasinobi, did not respond to calls seeking comment.

Red flags?

Other analysts say the CBN headed by Godwin Emefiele failed to open its books largely because of its mismanagement of the national treasury and massive financing of the public deficit.

In 2017, a member of the Monetary Policy Committee, Doyin Salami, criticized the apex bank for pushing the country into a severe economic crisis.

He criticized the CBN’s “massive injections of cash” into the government, accusing the bank of serving as a “piggy bank” for the government, against its own rules.

“The monetary data shows a sharp increase in the scale of CBN financing of the government deficit,” he said.

According to the Economist, as of 2016, the CBN had made cash available to the federal government in the trillions, mostly above legal thresholds.

He said the CBN’s claims on the federal government during the period amounted to 814 billion naira, which was “twenty times higher” than what the law allows.

The CBN rejected the request at the time, but has since continued to roll out the Ways and Means Facility to finance the country’s deficit.

During a public presentation of the approved budget for 2020 in January, Nigerian Finance Minister Zainab Ahmed revealed that the shortfall and increased spending had led to a budget deficit of around 6.1 trillion naira. against the 4.6 trillion naira budgeted by the government.

The minister revealed that the deficit was financed by borrowing N2 trillion from the domestic market, N1.2 trillion from overseas markets and N2.8 trillion from the CBN. CBN intervention took the form of Ways and Means as provided for in the CBN Act.

Experts, global financial institutions and rating agencies have continuously warned of the danger the CBN’s intervention portends for the country’s macroeconomic stability.

In its 2018 report, the latest report released by the bank, the apex bank said the country’s economy showed considerable resilience during the year, especially compared to its peers.

“Overall GDP growth accelerated to 1.9% in 2018 from 0.8% in 2017. Although this growth rate is below the pre-recession average of over 5.0%, the positive outcome that reflects the continued rebound of the Nigerian economy is gratifying,” the report said. mentioned.

“Partisan Regulator”

Meanwhile, amid widespread criticism over his handling of the naira and other monetary policies, the bank’s governor, Godwin Emefiele, has come under heavy criticism for his involvement in partisan politics.

Over the past few weeks, several campaign groups have been campaigning for Mr. Emefiele’s election as Nigeria’s next president.

The campaign infuriated many Nigerians, who called for his resignation or outright dismissal. But in his reaction, Mr Emefiele said he was focusing on strengthening the national economy.

Things took a dramatic turn when, on May 5, Mr. Emefiele filed a complaint with the Federal High Court in Abuja through his lawyer, Mike Ozekhome, challenging his eligibility to run for the presidency of the Nigeria while serving as Governor of the CBN. He argued that no law exempted him from contesting a political party’s primary election as sitting governor of the CBN.

Although the matter is still in court, many Nigerians have pilloried the CBN Governor for desecrating his sensitive position as chief depositary of the apex bank.

“Godwin Emefiele ridiculed the Central Bank Governor’s office,” noted Kalu Aja, an economist.

“He has no moral authority to oversee Nigeria’s monetary policy or external reserves.

“He’s basically deploying ways and means privileges to fund his political ambition. He should step down.”