President Umar Yar’Adua Photo: Sun News Publishing

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In a move yesterday that did not come to many as a surprise, President Umar Yar’Adua halted action on the new monetary policy announced by the governor of the Central Bank of Nigeria (CBN), Prof. Chukwuma Soludo before the Economic Management Team mandated to look into the issue could get down to business.

The Federal Executive Council had at its last meeting quizzed Soludo on the naira re-denomination for several hours at the end of which it directed the Economic Management Committee to work with the CBN to fine-tune certain aspects of the policy.

In suspending the policy, the president said the CBN Act of 2007, which Soludo cited as empowering him to propose the monetary measure, did not allow him to do so without his (president’s) consent and approval, pointing out that the CBN Governor neither sought nor got his approval on the matter.

The Attorney-General and Minister of Justice, Mr. Michael Aaondoakaa (SAN), told State House correspondents in Abuja yesterday that an observation was raised yesterday before the president, in the presence of the State House Counsel, Mallam Jalal Arabi that the CBN governor’s action on the matter could only stand if the approval of the president was sought and obtained in writing.

Since Soludo contravened Section 19 (1), sub-section 1 and 2 of the CBN Act, which requires that any matter dealing with issuing new currency and coins must be with the approval of the president, he said, the policy had to be suspended forthwith.

“I drew the attention of Mr. President to the provisions of the CBN Act of 2007 as to whether an approval was sought in accordance with the CBN Act before he (Soludo) commenced the process of re-denomination. The president, in the presence of myself and the State House counsel denied that such an approval was sought for, and neither did he grant any.

“I, as the chief law officer of the federation, hereby stop all actions on the re-denomination of the naira. This is because the action of the CBN Governor violated Section 19, sub-section 1 and 2 of the CBN Act. Therefore, the actions must abate. All actions of the CBN in the re-denomination must be in accordance with the CBN Act. So, until an approval is sought for and obtained in writing from the president, all actions on the re-denomination must stop”, he stated.

Before he rose from the briefing, the Attorney-General announced he was heading straight to the CBN governor’s office to communicate to him on government’s decision concerning the policy.
“I will communicate to the CBN governor within 10 minutes to stop all actions on the re-denomination of the naira until he has obtained written approval from the president”, he further pointed out.

The presidential spokesman, Mr. Segun Adeniyi had in his introductory remarks given an indication of the misunderstanding between government and the CBN governor when he stated point blank that the “so called autonomy” which the CBN claimed to have on such monetary policy was a ruse after all.

In announcing the policy, Soludo had said when it becomes operational, the re-denomination of the naira would restore the value of the currency close to what it was before the introduction of the Structural Adjustment Programme (SAP) in 1986 as it would as from August 1, 2008, exchange at N1.25k to $1 with N20 as the highest denomination.

Briefing the State House correspondents on the outcome of the Federal Executive Council meeting where the issue was exhaustively discussed, the Minister of Finance, Dr. Shamsudeen Usman had said the decision to refer the matter to the economic team was to tidy up and clarify a few technical areas of the policy which were not too clear to the council.

“It was only on a few technical issues that President Yar’Adua said they should clarify with the Economic Management team. But the point has to be made that it is absolutely within the laws of the CBN to do what it has done” he had stated.