Nigerian lawmakers push to curb central bank’s role in economic policy amid soaring inflation

The building of the Central Bank of Nigeria (CBN)

Nigerian lawmakers are proposing a bill to reduce the central bank’s control over economic policy by establishing a committee to coordinate monetary and fiscal policies, led by the finance minister.

This initiative comes as Nigeria faces a 28-year high inflation rate of 33.69% in April, alongside sluggish economic growth and currency challenges.

The proposed law would maintain the central bank’s role in managing monetary policy, but the new committee would oversee the coordination of monetary and fiscal policies.

Some economists warn that this could undermine the central bank’s authority.

Backed by 32 members of the ruling party, the bill requires Senate approval and President Bola Tinubu’s signature to become law.

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The government has not yet commented on the proposal.

The International Monetary Fund has also cautioned Nigeria against interfering with central bank independence, warning it could hinder efforts to control inflation and maintain stability.

The bill also proposes limiting the central bank governor to a single six-year term, replacing the current maximum of two five-year terms.

Former governor Godwin Emefiele, who served until June last year, was the first to serve a second term, during which he implemented currency restrictions that negatively impacted the economy and fueled inflation.

Additionally, senators have suggested reducing the temporary advances the central bank can provide to the government for budget support, a practice that increased under former President Muhammadu Buhari’s administration.