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CBN gives conditions for exchange rate review

We’re still in global tax deal – Zainab Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has said the apex bank will consider…

  • We’re still in global tax deal – Zainab

Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has said the apex bank will consider the advice of the International Monetary Fund (IMF) to review its exchange rate policies once Nigeria deepens local production of goods and services.

Emefiele stated this 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.

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.

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.”

He also addressed the recent moves by airlines to receive payments for international flights in dollars. “I have addressed this during Easter week and I have called them to tell them this is illegal to sell air tickets in dollars because it will polarize the economy and they have withdrawn that so I urge people to continue their business as it were.”

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%.

We’re still in global tax deal – Zainab

Meanwhile, the Minister of Finance, Budget and National Planning, Zainab Ahmed, has said the country has not opted out of the global tax deal.

Speaking at the sideline of the event, she said: “We have raised some issues that we are not comfortable with, therefore have not been able to sign up with other countries. We feel that somewhere along the line, they will recognize the limitations we have seen, and also make some necessary adjustments.”

Speaking on the concerns raised by ministers of finance at the meeting, the Minister said the Ukraine war has an impact on the global economy especially with food security challenges.

“In the case of Nigeria, it is also affecting us in terms of input for our fertilizer production and the biggest one is the high prices of energy. Nigeria produces fertilizer and now exports it but one of the major inputs for it is potash but it is threatened by the war. So, while the inputs are being received, the cost is high so it is driving up the price,” Ahmed noted.

She however said the federal government under the Presidential fertilizer initiative may raise support to the fertilizer blending plants to help subsidize the prices.

Sunday Michael Ogwu who is in Washington DC

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