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Central Bank of Nigeria (CBN) Governor, Mallam Sanusi Lamido Sanusi, has said he is bracing up for public spending “shocks” as the country prepares for the 2015 elections.
His disclosure reduces the chance of a reduction in the benchmark interest rate.
“Toward, the elections, there will be a supplementary budget,” Sanusi said in an interview on Bloomberg TV’s African Business programme at the weekend.
He added: “I don’t think I have seen an election cycle in any country in which the government has not spent money.”
The CBN governor, who is billed to finish his tenure in June 2014, is being wooed by northern leaders to join politics despite the fact that he has ruled out joining politics after his exit from the bank .
The CBN held its key interest rate at a record high of 12 percent at its last Monetary Policy Committee (MPC) meeting last week and said policy makers might raise borrowing cost to curb possible surge in government's spending in a pre-election year.
While President Goodluck Jonathan has pledged to keep the budget deficit under control, oil revenue has slumped this year and lawmakers are pushing to boost expenditure, adding to pressure on inflation.
“We are bracing ourselves for the possibility of shocks from the fiscal side, and we will have to respond on monetary side. We have always made it very clear that if we have to tighten then we will tighten,” the CBN governor added.
He raised concerns about high recurrent spending in the budget, such as salaries.
“There’s a lot of money in there that’s recurrent expenditure and overheads, and when you go down and start looking at the fine lines and the numbers, they’re quite frightening.
“And there’s a significant reduction in capital spending, which is a problem,” he added.
The apex bank had kept its benchmark rate unchanged since October 2011 to help stabilise the naira and keep inflation under control.
The Consumer Price Index (CPI) declined 7.8 per cent in October, the lowest in more than five years, while the naira has gained 1.1 per cent against the dollar, since the beginning of September to trade at N158.65 at the interbank last Friday.
Meanwhile, prominent northern politicians, including a former Speaker of the House of Representatives, Hon. Ghali Umar Na'Abba, former Governor of Bauchi State, Alhaji Adamu Mu'azu and former Governor of Gombe State, Senator Danjuma Goje, have attempted to convince Sanusi on why he should participate in active politics after his retirement.
The politicians made the overture yesterday in Abuja at a reception organised in honour of the new President of Nigerian Institute of Quantity Surveyors (NIQS) and former Minister of State for Power and Steel, Mallam Muritala Aliyu.
The leaders, in their speeches, urged Sanusi to engage in partisan politics, as they described him as one of the best of his generation.
Mu'azu explained that those who have excelled in their chosen career and have demonstrated good leadership quality and possess sound academic background should find every reason to participate in active politics.
He urged Sanusi to participate in politics, adding that the CBN governor would still achieve his dream of ascending the Kano emirate throne when the time comes.
"I am pleading that those of you who are professionally competent, educationally sound with adequate experience, including Dan Majen (Sanusi) himself should be in politics. What you are waiting for, whenever it comes, it is yours and it will be yours," he said.
The CBN governor, in his goodwill message, called on politicians and public officers to take responsibility and pay the price of making the country better for the younger generation.
Sanusi said although every Nigerian could not participate in active they should contribute to nation building.