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Why The Central Bank MPC Must Resist IMF Call For Further Hike In MPR

By Chief Tony Onyema Ishiekwene 
Article Why The Central Bank MPC Must Resist IMF Call For Further Hike In MPR
DEC 11, 2023 LISTEN

A couple of days ago, the imperialist International Monetary Fund (IMF), an arm of the World Bank, through her Director of Communication, Ms Julie Kozack, advised the CBN to further hike its Monetary Policy Rate (MPR), which currently stands at a very high 18.75%, at its next Monetary Policy Committee (MPC) meeting.

It is worth noting that every rates, including Commercial banks' lending rates, flows from the CBN MPR, with an upward adjustment for risks and margin. So currently, the banks lend to their customers an investors at between 25% to 30% or even more, depending on the Credit risk of the potential borrower. It is evident no productive investor will take loan at those prohibitive rates, when you consider that the Macroeconomic business climate is toxic- No roads, no Power, Water and general insecurity. So what you have, or those who are ready to borrow funds in Nigeria are Speculators and quick turnover traders- no productive activities Investors are borrowing funds for investment resulting in low Manufacturing contribution to GDP growth and even disinvestment by many exacerbating the worrisome Unemployment levels.

Yes I agree that in conventional Monetary Economics, you have to tighten Money Supply to tame escalating inflation, like we have in Nigeria at over 27% as at October 2023 but it worth noting that Nigeria's inflation is not the type you have in Europe and North American nations. Our inflation is imported inflation, resulting from negative terms of trade and Balance of Payment disequilibrium. In other words, Nigerian inflation is "Costs Push," not "Demand Pull," which traditional excess liquidity engenders.

It's time for Nigeria to shun the IMF's ill-advised policies. Nigeria has been on a tailspin since 1986 when the Babangida regime stupidly bought the wicked IMF advice to float and devalue the Naira exchange rate to the US Dollar. From N4 to a $, in 1986 to N1,200 to a Dollar today and the consequences have been dire- wipe out of the middle class, spiralling imported Inflation; mass poverty and Crime- Banditry, Kidnapping etc and Jakpa syndrome.

When will our efulefu Economists and slave-mentality CBN learn that IMF doesn't mean well for Developing Countries?

For a Country with so high and prohibitive Interest rates- killing SMEs and deterring Start-ups and causing unemployment, the IMF is advising MPC of the CBN to further hike the rates, to make borrowing to finance Investments out of reach of average investor, is more like committing Economic harakiri. To hell with the IMF. They never meant well for Nigeria.

From: Chief Tony Onyema Ishiekwene, BSc, MSc, ACMA, CGMA

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