The central bank’s rationing of hard currency and restrictions on foreign-exchange trading are hurting the economy, said Sanusi, 54. The economy expanded 2.35 percent on an annualized basis in the second quarter, the slowest pace since at least 2010.
Industry Deprivation
“We are depriving certain key industries of imports,” he said. “If we have to make a choice between economic growth and a devaluation, my recommendation is that we protect growth.”
Monetary officials should lower the key interest rate from a record high of 13 percent to help stimulate the economy since the government lacks the funds to boost spending in the face of lower oil prices, Sanusi said. Nigeria is Africa’s top crude producer.
“The portfolio flows are gone,” he said. “Inflation is already upon us. You have fiscal consolidation. It is time to loosen monetary policy. Otherwise we compound an exchange rate crisis for businesses with high borrowing costs and declining demand.”
Investment Outflows
Portfolio investors have fled Nigeria, with foreign holdings of naira government bonds falling to less than 10 percent of the total from 27 percent in 2013, according to Standard Chartered Plc. Sanusi also called on the ministers who will serve in Buhari’s cabinet not to act like “courtiers.”
“I hope people will have the courage to know that loyalty is about telling your boss the truth,” he said. Buhari, who came to power in May, has nominated ministers, although he hasn’t publicly unveiled their portfolios, and the Senate has to approve the nominees.
Sanusi, who became governor in 2009, was suspended by former President Goodluck Jonathan in March 2014 after he accused the state oil company of withholding billions of dollars from the government.
He won praise from investors for cleaning up the banking sector after a crisis in 2009 and attracting more bond and stock investment from abroad.
“Lamido Sanusi, being an expert, has his ground for saying this,” Ibrahim Mu’azu, a spokesman for the central bank in the capital Abuja, said by phone. “The central bank may look into what he is saying.”
