Expect inflation as FG is borrowing heavily to finance budget – Ex-CBN director
NEWS DIGEST – The former Director, Central Bank of Nigeria (CBN), Budgetary Department, Dr Titus Okunronmu, has made it known that the Federal government is borrowing money to finance its annual budget, which will bring about inflation.
The former CBN officer revealed that the Federal Government is borrowing heavily to finance the annual budget because the total revenue cannot cover the expenditures. “If the government is borrowing money and spent, we must expect inflationary impact on the economy,” he said.
Okunronmu declared this in an interview with Journalists in Ota, Ogun state, where he commended the retention of Monetary Policy Rate (MPR) at 14 per cent by the Monetary Policy Committee (MPC).
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The former director, who was reacting to the committee’s decision to retain the monetary policy at the existing rate, said the development was meant to stabilise the economy.
He futhered that the committee’s aim is to ensure some level of stability in the system to check the effects of government borrowing.
MPC, after the conclusion reached at its two-day meeting, retained MPR, the rate at which the CBN lends money to commercial banks at 14 per cent.
The committee said the threshold interest rate was 14 per cent with the asymmetric corridor between 200bps and 500bps around.
“the Cash Reserve Ratio (CRR) was at 22.5 per cent and the Liquidity Ratio at 30 per cent.” The committee added.
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