Ms Antoinette Sayer, the Director, African Department of International Monetary Fund, IMF has urged the Central Bank of Nigeria, CBN to urgently review measures put in place to restrict access to foreign exchange.
Sayer during an interactive session with the media said “The central bank has introduced administrative measures that limit access to foreign exchange and ban certain imports as a way of restricting the demand for foreign exchange.
“Those are measures that are quite detrimental, we think. It has certainly led to a lot of unhappiness in the private sector, as far as we’ve been aware, and understand that private investors see this as very detrimental to their economic activities.
“It is not something we think is sustainable or advisable. We hope that there will be an opportunity to review those restrictions and permit the exchange rate to continue to adjust.
“Of course, the exchange rate pressures in Nigeria and other oil producers has been considerable in the course of this past year because of what has happened in terms of, for example, foreign exchange earnings as oil prices have reduced those considerably, and the demand for foreign exchange continues to exert considerable pressure on their exchange rates.”
She also talked about the uncertainty surrounding the policy directionPresident Muhammadu Buhari’s administration.
She said “Since the elections, there has been continued uncertainty about the policy direction that the current administration is going to take, the waiting for a cabinet, and the vision and plans for pursuing the reform effort and what can be expected from that.
“It is certainly the case that there are a number of factors that have led to pressures on the Naira. In response, of course, the exchange rate, being an important instrument of adjustment in countries that have a flexible exchange rate, we think it is appropriate to allow the exchange rate to depreciate, with a view to helping to contain the demand for more foreign exchange and to help contain the level of imports that was not sustainable in light of the shock to the Nigerian economy.
“The exchange rate plays a very important role there. There are countries that do not have the exchange rate and as a result have an even more arduous burden of adjustment on the fiscal side.
“That is what Nigeria and other countries that have an exchange rate can avoid. So we think it is appropriate to have the exchange rate adjust.”