Former Governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi, has raised fresh concerns over Nigeria’s fiscal and monetary direction, questioning the continued reliance on borrowing despite recent economic reforms.
Speaking on the country’s policy trajectory, Sanusi acknowledged that the removal of fuel subsidy and the liberalisation of the foreign exchange market were necessary steps, but emphasised that their success depends heavily on proper timing and execution.
“I have always said the subsidy regime was unsustainable. We cannot continue supporting foreign refineries when we’re an oil-producing country,” he said, noting that the previous system encouraged inefficiencies.
He pointed to improvements in domestic refining capacity, stating that reduced dependence on fuel imports should ordinarily strengthen the nation’s fiscal position.
“Today, we have our own domestic refinery. We’re not importing petroleum products. We’re even exporting fuel, and this is very good for the economy,” he added.
Despite these gains, Sanusi warned that macroeconomic instability could undermine the benefits of reform if not carefully managed. He criticised the use of artificial exchange rates and excessive money supply, noting that devaluation was inevitable under such conditions.
“Artificial exchange rates, especially when you’re printing money, cannot work there was going to be a devaluation,” he said.
The former CBN governor questioned why government borrowing persists even after subsidy removal.
“If you’re not paying the subsidy and you’ve got the money, why are we still borrowing and borrowing? What are we borrowing for?” he asked.
He called for stricter fiscal discipline, stressing the need for consolidation following the removal of wasteful spending.
“We should now see fiscal consolidation. You cannot remove wastages and continue borrowing at a higher rate,” he said, adding that Nigerians should begin to see reduced fiscal pressure as a result of the reforms.
Sanusi also cautioned against poor policy sequencing, warning that implementing subsidy removal and exchange rate liberalisation without tightening monetary conditions could destabilise the economy.
“The naira drops to a bottomless pit there is a timing issue,” he warned, underscoring the importance of coordinated economic management.
Elijah Adeyemi
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