Central Bank of Nigeria governor Godwin Emefiele says “money printing” is part of the institution’s way of helping out the government in times of need.
Edo governor Godwin Obaseki said last Thursday that the bank printed about N60 billion naira before the federal government could meet its federal allocation sharing obligations for March.
But finance minister Zainab Ahmed said Obaseki lied. She said March allocations to states were derived from government revenues.
CBN chief Emefiele has, however, said there was nothing wrong with “money printing” and that the bank has been doing it for years. He said the practice was CBN’s way of lending to the government at all levels.
“If government cannot finance all its obligations,” the central bank should offer support as a lender of last resort, Emefiele said in a press briefing on Tuesday.
He said Obaseki’s government, and those of other states, have benefited from the practice. Emefiele, apparently unhappy about Obaseki’s “bombshell”, also threatened to begin demanding that states return the monies they were borrowed.
“In 2015, 2016 the kind of situation we find ourselves now, which is even worse than 2015-2016, we did provide budget support facility for all the states of this country, that loan remains unpaid till now and we are going to insist on the states paying back those monies going forward since they are accusing us of giving them loans,” he said.
In economic terms, “money printing” is also referred to as quantitative easing and occurs in a period of a recession or economic crunch, Nairametrics explained in a recent report.
Central banks pump money into the economy by either buying bonds or crediting the accounts of banks or the government in the hope that this will spur economic growth.
The money is often repaid via tax receipts when the economy recovers. The United States recently doled out over 1 trillion to Americans to help them recover from Covid-19. It was a type of “printing money”.