CBN Denies Weakening The Naira
Even as it reaffirmed its commitment to gradual rate convergence, the Central Bank of Nigeria (CBN) claims that the naira has not been depreciated. Dr. Kingsley Obiora, the deputy governor in charge of economic policy, announced this yesterday in Abuja at the retreat of the Fiscal Liquidity Assessment Committee (FALC).
It appears that the CBN has not formally altered the rates despite the Import and Export Window having done so.
According to a report, the local currency had been depreciated to N631/$ by the top bank. The Investors and Exporters (I&E) window was trading at N465/$ yesterday morning, according to a statement issued by the acting director of corporate communications, Dr. Isa AbdulMumin, who called the allegation fake. He stated that the apex bank was devoted to the rates around the I&E window gradually converging.
However, if the naira is devalued, as a financial analyst predicted would occur in a matter of days, Nigerians should prepare for 34 to 38% inflation in the next two to three months, according to Paul Alaje.
“No doubt the move will increase flows of foreign portfolio investment and foreign direct investment in dollars and more diaspora remittances without the need for rebate. More companies will also bring in their export proceeds dollars and not divert it to foreign accounts or use it to purchase equipment and bring it to sell,” he said.
In the meantime, Aliyu Ahmed, the Permanent Secretary of the Federal Ministry of Finance, Budget, and National Planning, urged the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS) to increase non-oil revenue in order to increase their contributions to the country’s overall revenue.
“Despite the plethora of tax and other revenue generating reform, revenues remain insufficient and below levels that could enable the Government to play its pivotal role in sustainable and inclusive development.”
“It, therefore, not only calls for strong policy coordination and consistency to bring inflation back to the CBN’s long-run objective and safeguard financial system stability, it stresses the need to ensure policy actions that could lead to the attainment of fiscal goals, leveraging on emerging technological innovations,” he noted.
Dr. Hassan Mahmud, director of the CBN’s Monetary Policy Department, stated that the CBN would keep enacting various quasi-fiscal policies to assist the Federal Government in managing the economy, address liquidity issues in light of global financial developments, and promote domestic growth.
He also stated: “The government’s response to these headwinds led to substantial budgetary allocations to boost economic activity and provide social safety nets, resulting in significant increases in public debt and its service costs. In addition, the widespread adoption of electronic modes of payment has further impacted monetary policy management in the Central Bank’s efforts to ensure price and financial system stability.”
“These developments call for a comprehensive fiscal consolidation effort to boost revenue mobilisation and strengthen the efficiency of public expenditures. It has also become imperative that fiscal and monetary authorities should intensify ongoing collaborative efforts and provide assurances that envisaged macroeconomic objectives are achievable under the present conditions,” he said.
