A bill for an act to amend the Central Bank of Nigeria (CBN) Act 2007 has been passed. The bill was sponsored by 41 members of the committee on Banking, Insurance and other Financial Institution.
Leading debate on general principles of the bill, the Chairman of the committee, Sen. Adetokunbo Abiru said the bill was read the first time on January 30th. The second reading was passed on Tuesday February 27. The mandate of CBN was derived from the 1958 Act of Parliament as amended in 1991, 1993, 1997, 1998 and 2007.
The proposed amendments were therefore aimed at strengthening the bank to discharge its primary mandate of maintaining monetary and price stability in support government’s economic growth objectives.
There are also challenges in monetary policy implementation occasioned by fiscal dominance and the rapidly changing financial landscape.
Abiru said the current act of 2007 which empowers the bank with the overall control and administration of the monetary and financial sector policies of the federal government, has not been amended for over 16 years, despite growing changes to the bank’s balance sheet.
He said the amendment was designed to align its governance mechanisms with global best practices.
According to him, the current act made no provision for coordination of monetary and fiscal policies which accounted for the reason monetary policies of the bank often diverge from fiscal policies to the detriment of the economy.
He said the bill introduces for co-ordination of the monetary, fiscal and trade policies, a Coordinating Committee for Monetary and Fiscal Policies.
He listed the functions of the committee to include: “Setting internally consistent targets of monetary and fiscal policies that are conducive to controlling inflation and promoting financial conditions for sustainable economic growth.
“Applying caps to any fiscal deficit at a level that can be financed without having recourse to direct monetary financing from the Bank, that is Ways and Means.”
He said membership of the proposed committee shall consist of, Minister of Finance who shall be the Chairman, Minister of Budget and Economic Planning, Minister of Industry Trade and Investment, Minister of Agriculture Governor of the Central Bank of Nigeria, The Chief Economic Adviser to the President, the Director General of the Securities and Exchange Commission.