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From: Kayode Adebayo kayusee1@yahoo.com [NaijaObserver] <NaijaObserver@yahoogroups.com>
Date: 31 October 2015 at 14:33
Subject: ||NaijaObserver|| Good Job, Buhari: Nigerian Govt Rejects Calls for Further Devaluation of Naira
From: Kayode Adebayo kayusee1@yahoo.com [NaijaObserver] <NaijaObserver@yahoogroups.com>
Date: 31 October 2015 at 14:33
Subject: ||NaijaObserver|| Good Job, Buhari: Nigerian Govt Rejects Calls for Further Devaluation of Naira
Source: PremiumTimes
Despite calls from some experts for further devaluation of the Naira, in the face of Nigeria's economic instability, the presidency on Thursday said the government will not devalue the currency again.
Vice President Yemi Osinbajo explained why the administration was opposed to such proposals.
"The way things are, devaluation will not help the local economy," he said.
In November, the Central Bank of Nigeria, CBN, devalued the Naira, initially from N155 to N168 to the dollar, and later to the current N198 to the dollar. The rate goes for as high as N222 in the parallel market.
The International Monetary Fund, IMF, recently urged the CBN to rescind its policy of denying access to foreign exchange for the importation of 41 items – a policy the CBN implemented to strengthen the Naira as global oil price remains unstable.
The IMF's Africa Director, Antoinette Sayeh, at the Fund's annual meeting in Peru two weeks ago, criticised the Central Bank of Nigeria's policy, describing it as detrimental to ordinary Nigerians.
Mrs. Sayeh called for a review of the restrictions to "permit the exchange rate to continue to adjust".
Apparently emboldened by the IMF position, a former CBN governor and current Emir of Kano, Muhammed Sanusi II, on Friday, called on the Federal Government to devalue the naira.
He warned that the country's economy was at risk of a possible a long term slip into recession if that step was not taken.
"Let's stop being in denial. We cannot artificially hold up the currency," the Emir said in a broadcast on CNBC Africa. "President Muhammadu Buhari needs help on the economy. We are depriving certain key industries of imports. If we have to make a choice between economic growth and devaluation, my recommendation is that we protect growth.
"The portfolio flows are gone. Inflation is already upon us. You have fiscal consolidation. It is time to loosen monetary policy. Otherwise, we compound an exchange rate crisis for businesses with high borrowing costs and declining demand."
The Nigerian Labour Congress rejected the emir's call, and accused him of canvassing the interest of the IMF and World Bank.
As CBN governor, Mr. Sanusi supported government's deployment of Nigeria's foreign reserves to strengthen the Naira.
Vice President Osinbajo criticised calls for the devaluation of the Naira on Thursday, saying this was not an appropriate option for the country's current economic realities.
The vice president was re-echoing views expressed earlier by President Muhammadu Buhari, who argued that further devaluation of the Naira was not healthy for the country's economy.
Exchanging views with the Italian Ambassador in Nigeria, Fulvio Rustico, and Canadian High Commissioner, Perry Calderwood, who visited him in Abuja, the Vice President said he disagreed with those calling for further devaluation.
"What we need to do is to start spending more on the economy and then things will ease up a bit," he said.
He outlined federal government's plans to set up a $25billion Infrastructural Fund from local and international sources, including through the country's Sovereign Wealth Fund, SWF, and the pension fund, among others.
The vice president announced that already other sovereign wealth funds have indicated interest in the Fund to help address the nation's decaying roads, rail and power infrastructure.
He said the current foreign exchange restriction by the CBN was a temporary measure to forestall the substantial depletion of the country's foreign reserves, particularly at a time when global oil prices at the international market was dropping.
The policy, he pointed out, was equally to bring some stability to the country's foreign reserves, without which Foreign Direct Investment, FDI, may be affected.
The FDI, the vice president noted, was more forward looking than portfolio investments being affected by the decision to manage the country's foreign exchange resources at the moment.
Mr. Osinbajo said the present administration would work with the CBN to ensure that legitimate businesses, especially previous contracts and loan commitments, were not badly impacted by the current foreign exchange restrictions.
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