“We may reconsider exchange rate policy”, CBN Gov. assures IMF

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Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has responded to calls by the International Monetary Fund (IMF) to review its exchange rate policies.

Speaking at the sideline of the hybrid 2022 spring meetings of the International Monetary Fund and the World Bank in Washington DC, United States on Thursday, Emefiele said the apex bank will consider the advice of the International Monetary Fund (IMF) once Nigeria deepens local production of goods and services.

He said: “When we raised the issue of over 43 items (excluded from the forex window), it had an impact on exchange rates and what we are doing is to put in place some intervention mechanisms to regulate the exchange rate. As long as demand for foreign exchange exceeds supply, we will continue to have these challenges.

“We have put some demand management policies which they do not like, the policies will be reviewed but we want to deepen the production of these items in Nigeria before we begin to review them,” Emefiele explained.

The CBN chief, while acknowledging the roles of the IMF and World Bank in advising economies around the world, Nigeria inclusive, stressed that the nation would never adopt the free float of Nigeria’s currency. He maintained that developing economies had the liberty of adopting “homegrown solutions” to their economic problems.

He said, “The IMF and World Bank provide advice that we work with. But even at some of our private meetings, we realise that there are challenges, leading us to adopt homegrown solutions to address them. We cannot adopt what is being proposed; we cannot adopt a free float of our currency.”

Emefiele maintained that the CBN was more concerned about reducing the high demand for foreign exchange and admitted that based on advice from international bodies, the naira rate had been adjusted from N155 to N410, so the apex bank could not be accused of not adjusting the currency.

He listed the many ways the CBN had worked in reducing demand for dollars, which included the stoppage of forex for the importation of rice and maize, and support for the development of the Dangote refinery, which is expected would reduce demand for foreign exchange for imported petroleum products when it comes on stream.

“With the reduction of forex for rice or maize, demand will drop. As it drops, we can adjust the exchange rate. We will continue to engage the IMF and World Bank,” he explained.

He said the IMF demonstrated in 2020, when the Risk-free rates (RFR) to all countries affected by the COVID-19 pandemic which Nigeria benefited about $3.4 billion.

“In 2021, we received another fund of over $3 billion under special drawing rights. Our resolution at the IMF is that we always want them to understand our peculiar issues.”

For the 2023 elections, Emefiele said: “At the central bank, we remain focused on our job and we are happy that we are playing our role in supporting the Nigerian economy. We have been at this since 2015, when inflation rate was almost at 19 per cent, it came down to almost 11%. Because of the increase in energy prices and electricity prices, it went up to almost 18% again and we have managed to bring it down to below 16%.”

He said the bank was putting in place facilities to support households, businesses and others at single-digit interest rates, noting that the IMF has held a positive position about Nigeria’s growth prospect at 3.4%.




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