An elder statesman and former Minister of Finance, Olu Falae has posited that the cash scarcity in some parts of the country is a ploy by the Federal Government to contain inflation in Nigeria.
Information Nigeria reports that in last few days, despite the Central Bank of Nigeria’s (CBN’s) earlier directive to banks to continue to issue both new and old notes simultaneously, there is still a shortfall in the supply of the notes.
The country had late last year to the early part of 2023 battled with a cash crunch owing to the redesign of naira.
However, while speaking on Channels Television’s Politics Today on Thursday, the former Secretary to the Government of the Federation averred that the current scarcity of banknotes in some parts of Nigeria is a move by the government to tackle inflation.
“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.
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“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,” the former Finance Minister said.
Some bank officials, according to News Agency of Nigeria, have alleged that the scarcity is due to hoarding of the bank notes instead of returning them to the economy after earlier cash scarcity was addressed.
