CBN ways & means under Buhari triggered inflation - Sanusi

The former governor of the Central Bank of Nigeria (CBN), Muhammad Sanusi II, has said the CBN’s lending to the federal government under the administration of former President Muhammadu Buhari through Ways and Means triggered inflationary pressure in Nigeria and weakened the value of the Naira.

The CBN’s loan to FG in value terms rose to N26.94 trillion in May 2023 from N24.07 trillion in January 2023, according to the data from the CBN.

In May 2023, before Buhari left office, the ways and means were securitised after the House of Representatives approved the request by the former President to restructure the N22.7 trillion loan from the CBN.

After the loan restructuring, the ways and means dropped to N4.36 trillion in June 2023. This represents N120 billion more borrowing by the Federal Government after securitisation.

Sanusi said the CBN had embarked on aggressive monetary tightening through various liquidity control instruments, including open market operations, Open Buy Back (OBB) and high T-bills rates, indicating that the bank was sticking to its core mandate of financial systems stability and inflation control.

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“I am optimistic, especially in the short term. We’ve had eight years of rapid expansion of the Central Bank’s balance sheet through ways and means. And that has fueled inflation and weakened the currency. And that is the fact,” Sanusi II said at MTN capital markets day.

Acknowledging that the apex bank can use different instruments to mop up excess money in circulation, Sanusi said it needs to do it in a manner that minimizes the cost to both the Central Bank and the government’s balance sheet, and that’s why it has to rely a little more on non-conventional instruments.

“If you look at Open Market Operation (OMO) Bills and OBB rates in the last few weeks, I can see that the CBN has started a process of aggressive tightening. OBB rates are beginning to approach what they should be. And I think that’s what the market needs to look at; that the Central Bank is tightening money and fighting inflation as a primary focus,” he stated at the event.

He urged the audience to show understanding that those new monetary policies take time to manifest.

“I don’t think we have a problem for the short term. I think the Central Bank is doing the right thing – tightening money, clearing the backlog, trying to fund the market, and I think we will have stability.”

Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.