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The Central Bank of Nigeria (CBN) Governor, Sanusi
Lamido Sanusi, yesterday reacted to recent criticisms credited to his
predecessor, Chukwuma Soludo, on the management of the nation’s
economic policies, describing it as “alarmist.”

Mr Sanusi, who was briefing reporters on the
resolutions by the Monetary Policy Committee (MPC) meeting yesterday in
Abuja, said Mr Soludo could not have been right to declare that the
country’s economy was facing imminent collapse, considering the damning
situation the global economy is currently going through.

“I wish he (Soludo) was specific on some of those
things he thinks we should do to save the economy from the crisis or
collapse he is talking about, and give recommendations,” Mr Sanusi
said, adding, “I think some of those remarks were alarmist and did not
take full cognizance of the situation we are in today.”

Failing short of tracing the root of the present
crisis in the economy to Mr Soludo’s administration, the CBN Governor
explained, “We are in the middle of global economic crisis (where our
country’s) banking system has lost 66 per cent of its capital. The
reality is that if we had intervened in 2007 or 2008, when the warning
signals were becoming clear that the banking system was heading towards
a point of crisis, due to the opaque situation in the capital market,
we would not be dealing with the kind of crisis we are facing at this
moment.

“Once it became clear that the banks had lost
capital, because of margin loans and exposure to petroleum products
importation and very weak regulation and supervision, it was clear that
the banks cannot continue to lend at the rate they were used to,” Mr
Sanusi said.

“For that reason, I supported the decision of the
National Economic Council that government should draw down on the
Excess Crude Account in order to augment government payments. And if
credit is not flowing into the economy and government is not lending,
we will have a full blown recession.

“Excess Crude Account was saving for a rainy day. And
when price of crude oil crashed from $147 per barrel to $40, and output
crashed from 2.3million barrels a day to less than one million barrels
per day, it is not just raining, it pouring.

“One needed to have counter-fiscal condition. The Excess crude Account was used to fund that counter-fiscality.”

Playing politics

Mr Sanusi said Mr Soludo himself pursued
counter-fiscal monetary policy measures and reduced the liquidity ratio
from 40 to 25 per cent, and cash reserve requirement from 42 per cent.

“These were appropriate quality responses in the time
of crisis,” he said. “For me, the decision of government to implement
financial sector reforms was long overdue. The announcement that
petroleum products distribution should be deregulated over time is also
a very good decision that should be implemented.

“The focus of the Minister of Finance on employment
generation and industrial development policy are long overdue and
should be encouraged. The reforms in the capital market are good. We
are not exactly there yet, but in terms of taking the right steps, I
think the government has done all that is necessary to do.”

Mr Sanusi said some of the comments credited to Mr Soludo might be political.

“Soludo had contested an election some time ago, and
as a member of the Peoples Democratic Party (PDP), one does not know
how much his statement is economics and how much of it is politics. But
I am responding to the economic aspect of the discussion and not
involved in the internal PDP family political affair,” he said