The Governor of the Central Bank of Nigeria (CBN), Malam Sanusi Lamido Sanusi, Wednesday  called for fiscal discipline to help keep inflation rate below 10 percent.

Bloomberg quoted Sanusi to have said this in a text message from Mecca, Saudi Arabia.

The latest National Bureau of Statistics (NBS), Consumer Price Index (CPI) report for July, had shown that inflation slumped by 9.4 per cent year-on-year in July 2011, compared with the 10.2  per cent, year-on-year recorded the previous month in the new CPI series.

According to the banking sector regulator, the slowdown in inflation to 9.4 percent last month was mainly due to food prices.

The CBN had raised its benchmark interest rate four times this year to 8.75 percent to help curb inflation as government spending increased. Finance Minister Ngozi Okonjo-Iweala, who took office Wednesday, had also vowed to tighten policy to put Nigeria on a “better fiscal path.”

Sanusi was quoted to have said: “To sustain low inflation levels, we do hope that Ngozi Okonjo-Iweala will bring fiscal discipline to bear and this should support our tightening measures. Price-growth eased last month because of lower food inflation due to the harvest. We need to keep an eye on core inflation and see how it behaves next month.” 

The next CBN’s Monetary Policy Committee (MPC) meeting will hold on September 20.

Meanwhile, the Attorney General of the Federation and Minister of Justice (AGF) has fully expressed support over the action of the regulators on the three nationalised banks.

A letter signed by the Chief Press Secretary to the AGF, Mr. Ambrose Momoh, dated August 10, a copy of which was made available to THISDAY, said that the AGF was fully informed about the various steps taken by the regulators.

The Nigeria Deposit Insurance Corporation of Nigeria (NDIC) had about a fortnight ago, bridged three erstwhile rescued banks - Afribank Plc, Bank PHB Plc and Spring Bank Plc, following their inability to recapitalise, after their banking licenses were withdrawn by the Central Bank of Nigeria (CBN).

Three new banks namely – Mainstreet Bank Limited, Keystone Bank Limited and Enterprise Bank Limited, were later established to replace them respectively. The banks were thereafter sold to the Asset Management Corporation of Nigeria (AMCON) through a purchase and assumption agreement.

The letter explained: “The CBN, NDIC and AMCON had informed the AGF that the actions taken on these banks are on the ultimate interest of depositors and the safety as well as soundness of the Nigerian financial system. The AGF is aware that the NDIC had composite interaction with the CBN, Ministry of Finance and the Ministry of Justice on these actions.

“The AGF is aware that the NDIC, CBN and AMCON acted in full appreciation of their functions and powers under their respective statutory mandates and particularly, the protection of depositors and the system. He will continue to monitor these actions in order to ensure that the appropriate laws are complied with and due process followed.”
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