Emmanuel Thomas, Lagos
October 13, 2015 – The International Monetary Fund (IMF) has x-rayed recent policies by the Central Bank of Nigeria (CBN) and came out with the conclusion that the policies have led to a lot of unhappiness among operators in the private sector.
Director, African Department IMF, Ms. Antoinette Sayeh made the observation while speaking at a press briefing in Lima, Peru.
According to her, such negative policies include recent introduction of administrative measures that limit access to foreign exchange and ban on 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, private investors see this as very detrimental to their economic activities.
“So it’s 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”, she said.
She attributed recent devaluation of the Naira to a lot of issues.
“Those, of course, include in the run up to the elections this year, some uncertainty about what the possible outcome of those elections would be. Since the elections, a continued uncertainty about the policy direction that the current administration is going to take, the waiting for a cabinet, the vision and plans for pursuing the reform effort, and what can be expected from that. So it’s certainly the case that there are a number of factors that have led to pressures on the Naira”, she said.
The IMF also condemned inability of the Naira to trade freely with other currencies adding that 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.
“ So the exchange rate plays a very important role there. There are countries that don’t have the exchange rate, and as a result have an even more arduous burden of adjustment on the fiscal side. That’s what Nigeria and other countries that have an exchange rate can avoid. So we think it’s appropriate to have the exchange rate adjust”, she said.
On what the policy meant for Nigerian population, she stated that some of the products that are being disallowed are products that average Nigerians buys.
“Those restrictions on those products are already making it harder for the average person to buy milk at an affordable price. So they’re already feeling the impact of those restrictions. Not in a very beneficial way, so we think it’s certainly advisable to have a second look at those”, she said.