Financial analysts have called on the federal government to secure long term foreign loans to clear foreign exchange forwards, foreign portfolio investors and airlines trapped funds.
This is against the backdrop of the lingering forex scarcity and the pressure on the local currency with a dollar exchanging for over N1, 365.
The dollar has continued to rise despite the $2.2billion facility from the African Import Export Bank (AFREXIMBANK) even as analysts say this is not enough.
The President of ABCON, Aminu Gwadabe said, “The $2.2billion Afrexim bank crude prepayment facility is a welcome development but I don’t think it’s enough to stimulate the market considering the situation because if we put $2.2billion into the market, we have been seeing demand in the I&E window alone ranging from $150million to $250million daily so, in 10 days, the $2.2billion will be exhausted. Speculators will speculate and we will run it out between 10 to 15 days.”
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Founder, Cowry Asset Management Limited, Johnson Chukwu, said only a long term loan with a span of at least five years would solve the current challenge.
“An option is to arrange a long term loan that its latest repayment won’t be less than five years so that the government can clear the arrears and it also makes the government stabilise the foreign exchange market before repayment.
“There are matured forwards of about $6billion,there are money owed airlines, Foreign Portfolio Investors and so on. So the money owed will determine the loan that would be needed to pay the outstanding debt and make the market liquid.”
Also speaking, Kunle Olasanmi, said expected inflows from external borrowing, donor support, oil production, and sales receipts would stabilise the FX market.
According to him, a stronger Naira will attract foreign investment, encourage local businesses to expand, increase the purchasing power of households.
