Photographer: George Osodi

Nigeria's Monetary Policy Standoff May Be Sign of Things to Come

It’s not just in the U.S. where tensions between a president and lawmakers are causing institutional paralysis.

Nigeria’s central bank had to cancel a Monetary Policy Committee meeting -- scheduled for Monday and Tuesday -- because senators are refusing to confirm President Muhammadu Buhari’s new appointments to the interest rate-setting body.

The issue goes beyond monetary policy. The upper house -- including members of Buhari’s party -- says it won’t approve any of his appointees until he replaces the head of the anti-corruption agency, a former policeman who’s ruffled feathers with aggressive talk about going after legislators accused of graft.

It’s little coincidence that the dispute is heating up as politicians increasingly focus on next year’s national elections. Buhari, who’s 75 and spent several months last year getting treated in London for an undisclosed illness, hasn’t said if he’ll run for a second term. He’ll need the support of the majority of lawmakers if he does. They could well use that as leverage to delay signing off on this year’s budget until they get more funds allocated to their constituencies.

Markets are so far unperturbed by the spat or by fuel shortages that are hobbling the economy. Nigerian stocks are up 18 percent this year in dollars, the most in the world. And Nigeria’s local-currency bonds have returned 4 percent in the U.S. currency, almost double the average gain in emerging markets.

That may not continue, though, if the political paralysis deepens, according to Standard Chartered Bank Plc.

“A lot of the outlook for 2018 is essentially about the 2019 elections and this delay to the MPC meeting -- given the failure of the National Assembly to approve the new MPC members in time -- will just reinforce that,” said Razia Khan, the head of macroeconomic research at Standard Chartered in London.

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