Some think this could further weaken institutional safeguards that preserve the credibility of policymaking and the ability of the central bank to control inflation. Getting the CBN to be involved in deficits that are not highlighted in the budget, even though government highlights other sources of deficit financing is worrisome. “CBN financing of deficit is highly inflationary. This kind of deficit financing is characterised in some literature as inflation tax. Fitch views the Nigerian government’s fiscal revenue and expenditure projections for 2021 as broadly realistic, which should preclude further significant borrowing by the sovereign from the CBN facility this year.

Source: The Guardian January 26, 2021 04:41 UTC