Naira Scarcity Is Government’s ‘Attempt’ To Manage Inflation – Falae

Naira Scarcity Is Government’s ‘Attempt’ To Manage Inflation – Falae

“I suspect that the scarcity of naira – which everybody feels including myself –  is an attempt by the government and the Central Bank to manage inflation. If that is so, then I am afraid, they have to think again because you see, the high level of price inflation is not being caused essentially by excess liquidity,” he said on Thursday’s edition of Channels Television’s Politics Today. 

“It is not what we call in economic parlance a demand-pull inflation that we have. It is a cost-push inflation. The cost of imports of raw materials, machinery, and spare parts. The increased cost of those items is what is causing the inflation we are facing today.

“So, trying to mop up liquidity in my view is not the right thing to do. There may be other reasons for making the naira scarce. But surely, the reason should not be an attempt to manage what is essentially cost-pull inflation through what I call a traditional solution to demand-pull inflation.”

Aside from this, the former minister of finance, budget, and national planning believes the devaluation of the country’s currency is the major cause of inflation in Nigeria.

“The devaluation of the naira is the main cause of inflation in Nigeria today,” he maintained.

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