By BABAJIDE KOMOLAFE

The Governor of Central Bank of Nigeria (CBN), Mallam Lamido Sanusi has said that the planned removal of fuel subsidy would not trigger very high inflation rate in the country.

Fielding questions from journalists at the end of the 3rd Bankers’ Committee retreat in Calabar, Cross Rivers, Sanusi said that only about two per cent rise in inflation is anticipated and that it is in the short term.

“If inflation remains at about 10.5 per cent and subsidy is removed, we expect it to be at about 12.5 per cent, which is just an addition of 2 per cent.”

He pointed out that the apex bank is aware of consequent inflation as a result of the removal of fuel subsidy, “but most of what is said is exagge-rated,” he said, adding that, “inflation impact will be present in the short term but over the long term the benefits of the removal will outweigh it.”

Commenting on the state of the banking industry, he said the banking system is now stable and well positioned to stimulate the growth and development of the economy.

“After two years of focused attention by the regulator and operators, the nation’s financial crisis is in the final lap of resolution.

“In year 2012, the banking industry agenda will address outstanding issues relating to the restoration of the balance sheet of banks, entrench-ing corporate governance, avoiding build-up of non-performing loans and encouraging lending to the agricultural sector, amongst others.

”The Bankers in a communiqué at the end of the retreat commended President, Goodluck Ebele Jonathan, for his reform agenda at creating jobs and growing the economy, and resolved to impact the economy more positively.

Sanusi said the Bankers’ Committee, which has the CBN Governor, CBN’s Deputy Governors, Managing Director of the Nigeria Deposit Insurance Corporation and the Chief Executive Officers of the deposit money banks present chose the theme: ‘Financial System Stability and Implication for Economic Development’, in recognition of the challenges facing the global and local financial system.

On monetary and fiscal policy development, the Committee in the Communiqué advocated greater fiscal prudence and rationality in government expenditure. The Committee asked for the establishment of the sovereign wealth fund (SWF) and expressed support towards its operationalization.

The Bankers’ Committee engaged experts from within and outside Nigeria for the retreat to develop strategies for improving on the gains recorded in real sector development, ensuring sustained stability of the financial system as well as determine further opportunities for financial system intervention, Sanusi said.

According to the apex bank boss, the CBN is keen on increasing the impact of the banking system on the economy and by that is adopting a strategic approach to increase formal usage of financial services to 70 percent from the current level of 36% percent of the adult population of Nigerians.

“We affirm our commitment as bankers to a stable financial system for Nigeria and one that contributes to economic development,” Sanusi said, stressing that the apex financial institution has taken proactive actions to address short, medium and long term issues facing the banks.

Sanusi said the central bank will remain focused on its primary mandate of ensuring price stability, stressing that it has instituted a framework for enhanced monetary policy, transparency and accountability and will in the short term, “continue to implement a tight policy rate environment to support price stability.”

The Governor also reiterated the commitment of the Central Bank and the Bankers’ Committee to the success of the cashless transaction scheme, stressing that “commencing with the pilot scheme in Lagos, the Central Bank is committed to bringing the nation’s payment infrastructure to global standards by 2015.