The Senate on Friday grilled Governor of the Central Bank of Nigeria, CBN, Yemi Cardoso alongside other members of the national economic team over state of the Nigerian economy, and depreciation in the value of the Naira especially against the United States Dollar.
During the interactive session organised by the joint Senate Committees on Finance, Appropriations, Banking, Insurance and other Financial Institutions, the CBN Governor insisted that to stop the free fall of the Naira in the foreign exchange market, Nigerians must reduce their appetite for the U.S Dollar including consumption and usage of foreign goods.
Cardoso says without moderation of demands on US Dollars, the CBN has no magic wand to turn around the fortunes of the economy and the country’s currency, the Naira.
He disclosed that monetary tools of the apex bank aimed at reining in inflation and stabilising foreign exchange are already yielding fruits resulting in over $1 billion in the economy in the last few weeks and foreign portfolios showing interest to invest in Nigeria.
Though the CBN Governor could not tell in specific terms when the Naira will stabilise against the U S Dollar, he however pointed that the Nigerian foreign exchange market is currently facing increased demand pressures, causing a continuous decline in the value of the Naira.
He attributed factors contributing to this trend to speculative forex demand, inadequate forex supply, increased capital outflows, and excess liquidity.
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He stated that the apex bank in addressing exchange rate volatility, a comprehensive strategy has been initiated to enhance liquidity in the FX markets which includes
unifying FX market segments, clearing outstanding FX obligations, introducing new operational mechanisms for BDCs and IMTOs, enforcing the Net Open Position limit, Open Market Operations and adjusting the remunerable Standing Deposit Facility cap among others.
On Inflation rate, the apex bank Governor assured Nigerians that it will drop to 21.4% by the end of 2024 aided by improved agricultural productivity and easing global supply chain pressures
Chairman of the Senate Committee on Finance, Sani Musa questioned the Ministers and CBN Governor, over the $3.3 billion collected as loan to stabilise the Naira as expected positive effects are yet to be felt months after.
Chairman of the Senate Committee on Banking , Insurance and other Financial Institutions, Adetokunbo Abiru in his remarks, asked the CBN Governor to ensure proper synergy between monetary and fiscal policies.
He specifically urged the CBN Governor to make available to the Committee, audited account of the apex bank and its budget .
The Minister of Finance, Wale Edun in his submission told the lawmakers that the Federal Government is working to revisit the social investment programme and safety net for Nigerians
citing that during the Covid pandemic it was seen to have reduced poverty based on available statistics
Edun says the CBN is working to deliver a foreign exchange market that is transparent, with rules and processes that captures the smallest transaction. He further stated that in the medium term, measures taken to improve revenue starting with oil revenue which brings Dollars and Naira is key to having a boast to the economy
The Minister of Finance and Coordinating Minister of the Economy, Wale Edu also reinstated the need to ensure that government expenditure is wisely spent and agreed with the CBN boss that fiscal and monetary policies of government will complement each other.
After several hours of interface, the Committee members believed that the current reforms are steps in the right direction and long overdue.
(Editor: Terverr Tyav)
