I'm Under Pressure to Draw Down Reserves -- Soludo

Vanguard (Lagos)
NEWS
October 27, 2006
Posted to the web October 27, 2006

By Emma Ujah
Abuja

BARELY six months to the end of the present administration, the Governor of the Central Bank, Prof. Charles Soludo, has cried out over intense pressure from the political class asking for foreign resrves to be drawn down and shared.

Addressing the 11th Monetary Policy Forum in Abuja, yesterday, he said what the political leaders, especially governors were asking for would only exacerbate the liquidity overhang by triggering high rate of inflation and make life more difficult for Nigerians, if they have their way.

Prof. Soludo lamented that in spite of efforts at educating governors on the need for prudent management of resources, many of them failed to appreciate the need to save for the rainy day and therefore urged the forum made up mainly of banks' Managing Directors, officials of regulatory agencies in the financial industry and other operators to intensify the campaign for cautious spending, particularly as the nation enters the election year.

His words, "some of them are telling me, in a developing country like ours, inflation is actually a good thing, and I am talking about just two, three days ago.

"I don't know how some guys are so obsessed with this inflation thing. They are saying the governor of Central Bank may be because you didn't run for an election, otherwise he would have understood more that there is hunger in the land.

"I am talking about at the highest level of decision making -- state governors, these are not just the man on the street and they are pressuring, 'open the tap and let the thing flow'.

"I was at a conference recently where a governor was addressing at least 1,500 Chartered Accountants and he was saying "yes, looks good in the books but what is the use of having these reserves when there is so much poverty everywhere. And he got almost a standing ovation. We should bring the thing home.

"So getting the word out that as they are talking of releasing the money for poverty eradication, that same poor person you want to help would be several times much worse off if with N7,500 minimum wage or N10,000 a month, or for the graduate that earns twenty-something thousand or thereabout in a month, then the cost of garri doubles, the cost of transportation doubles and so on and so forth.

"Increasingly, he is able to afford less and less garri on the table and we are not going to be able to buy for everybody by government. It is therefore important to know that low inflation is a must. It is important for both poverty reduction and institutional development and for the economy to move for investment and so on."

Robot  Villager

# 1 BARELY six months to the end of the present administration, the Governor of the Central Bank, Pro...Read the full article. Posted by Robot| 27.10.2006 13:29