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Published On: Thu, Sep 28th, 2017

CBN not overfunding Federal Government -Emefiele

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CBN Governor, Godwin Emefiele

By Etuka Sunday

The Governor of Central of Nigeria (CBN), Mr. Godwin Emefiele has said that the bank is not overfunding the Federal Government as being speculated.
According to Mr. Emefiele, what was regarded as overfunding was actually overdrawn.
He made the clarification while addressing newsmen shortly after the Monetary Policy Committee (MPC) meeting held in Abuja.
Emefiele who doubles as the chairman of the committee said: “let me state categorically that the central bank of nigeria has not over funded the federal government.
“The federal government on its own decided that all its funds that are in other banks both local and foreign currencies should be moved to the central bank of Nigerian into the TSA as we all know.
“And I think it is important that we put it in perspective, if you are the customer of a bank, you have fixed deposit account and for some reasons you have spontaneous financing to fund a project, your own bank or financial institution if you ask your bank to allow you to overdraw you account, temporarily, your bank will, so this has nothing to do with central bank or any bank.
“But the assurance that I have to give is that there is no truth in the issue of over funding because whatever is overdrawn is far less than what the federal government also has in its TSA account. So basically this has to do with the issue of lack of understanding of the operation of the central bank.
“ But I think it is also very important for me to stress that at a time when the global economy is faced by shock that we are faced with vulnerability in the global economy, most central banks do not have a choice than to come to the aid of their government particularly when you consider what is the size of the central bank cash ratio to the GDP,” he said.
He said, the allegation of overfunding was a misconstrued personal statement of one of our PMC members.
”The fact that MOC members are allowed to make personal statement without being coaxed, without being censored further confirmed the fact that our MPC members are independent minded people who based on data presented to them, take their decision.
“But I think I must say that the Nigerian central bank remains one of the most transparent central bank in the world because if you read the monetary policy authorities of most central banks in the world you will find out that they are not as detailed or providing the level of transparency that we have displayed.
“But I think it is important that I state the fact that the federal government and the central bank or the central bank is not just banker to government but an adviser to the government not just to the government but bankers last resort. But talking of issues that were raised which one has to do with issues of increase purchase of treasury bill, there is nothing hiding in that because that is a normal open market activity in the bank and it is allowed or DMO or the ministry of finance is allowed to conduct in line with the need of.”
The CBN’s Governor said, “in nigeria the size of our balance sheet to the GDP is 23 per cent but I will give you the data if other banks. The Peoples bank of China the size of its balance sheet to the GDP is 45 percent, in the Euro zone is 27 percent, the Swiss central bank is 95 percent the bank of Taiwan is 98 percent, the bank of Japan is 104 percent, the Bank of England is 22 per cent and the US is 28 percent.
“So if Nigeria’s balance sheet size to GDP is 23 per cent, I think it calls for no cause for concern or worry for anybody to begin to come to a conclusion the way the personal statement of an MOC member has been understood,” he said.

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