16th October 2023
The International Monetary Fund has said the naira is currently under pressure and Nigeria is free to seek loan from the Fund to stabilise the currency if it considers a good option.
The Washington-based lender however noted that recent exchange reforms and other steps taken by the Nigerian authorities were in order.
It also expressed support for Olayemi Cardoso-led Central Bank of Nigeria’s last week’s decision to halt the eight-year foreign exchange ban on cement, rice, poultry products and 40 other items. The past administration of the CBN had imposed the forex ban in 2015.
The made this known at the World Bank Group/International Monetary Fund Meeting in Marrakech, Morocco.
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IMF said inflation in Nigeria was till high at 26 per cent in August while the naira continued to be under pressure.
The local currency, which fell from about 450/dollar to an average of 760/dollar following the exchange reforms of the President Bola Tinubu, has continued to drop at the parallel market.
The local currency plunged to 1045/dollar on Thursday.
The new central governor also plans to place a limit on the CBN’s fiscal side interventions, while also proposing responses to addressing inflation and price stability issues.
Cardoso said, “These problem statements need in-depth review by the new Central Bank leadership team to determine what mechanisms are currently working, what can be tweaked or dispensed with and what new tools need to be introduced”
On how the CBN can be refocused to support economic growth, he said, “The economic policy proposals of the administration identify a set of fiscal reforms and growth targets that will achieve $1tn GDP within eight years.
In reviewing selected BRICS and MINT countries, with large populations and similar developmental characteristics as Nigeria, it is interesting to identify macro-economic indices that point to Nigeria’s economic trajectory, given the faithful implementation of the proposed economic reforms. In economies bigger than $1tn, these indicators include moderate inflation, sizable foreign reserves, and the capacity to quickly rebound from a cyclical economic downturn.”
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