Responding to a statement by the International Monetary Fund that the Nigerian naira is overvalued and increased exchange rate flexibility might be needed in Nigeria, the governor of the Central Bank of Nigeria (CBN ), Lamido Sanusi, in an interview with CNBC Africa said, "We do not believe that the Naira is over-valued. We do not believe that at a time when the oil price is going up and output is going up we should be losing the value of our currency."
"We also do not think that it makes sense, if the IMF is concerned about inflation, to ask a country that is import dependent to devalue its currency. So the advice given by the IMF, frankly, is not based on sound economic logic."
The statement from the IMF had said, “Greater exchange rate stability will prevent one way bets in the foreign exchange market and cushion external shocks. Nigeria’s strong external position and low debt helped mitigate the impact of the global financial crisis. However, a pro-cyclical fiscal stance and an accommodative monetary policy have resulted in high inflation and a loss in international reserves.
"Further monetary tightening may be needed should inflation pressures continue. Moving gradually toward an inflation-targeting regime, once the necessary institutional underpinnings are in place, will help anchor inflation expectations.”
Also, the House of Representatives, in a reaction, criticised the IMF's statement and said that the IMF cannot dictate to Nigeria on how to run its economy. A spokesperson said, “Nations are not obliged to agree with the IMF because every nation has a path to economic development, which it has charted for itself. In the case of Nigeria, we have the Vision 2020 agenda. We know what is right for us and we can pursue our goals without the IMF dishing out to us what it feels is the right approach to good governance and economic development.
“Nigeria won’t just agree to devalue the naira because the IMF says so.”
Some analysts also had mixed emotions about the IMF's position. In an interview with Punch newspapers the President, ValueFronteira Limited, Dr. Martin Oluba, said " “I don’t agree with them on that for many reasons. What are we devaluing for? Are we devaluing because we are exporting something? Devaluation is not depreciation."
"The truth is that the current fiscal policy disposition of government, which does not permit investment in infrastructure that are not entrepreneurial supporting and does not also permit the diversification of the economy into other foreign exchange earnings areas like agriculture and solid minerals, will eventually make us to witness a depreciation of the naira. The pressure, over time, will result into devaluation."
“But that is a futuristic thing, and to that extent, I agree with the IMF; but for devaluation to be pursued at this point in time, it will not help because we do not have anything that we are going to export. So, even if we devalue at this point, are we devaluing because we are giving incentives for others to come and carry our produce?"
"The views and opinions expressed in these comment(s) or article(s) do not necessarily reflect the views or opinions of NGEX, its partners or its affiliates."
victor ojinnaka Dublin, Ireland April 10, 2011
It is good to know that there are people like Sanusi Lamido Sanusi.He should keep up his good job.Don't ever back down for all these I M F GANGSTERS.
OBJ HOUSTON, TEXAS, USA February 22, 2011
Thank God we have a CBN governor with knowledge. Nigeria has not recovered from the demise of the devaluation that led to some of our current doldrums along with poor leadership and poor economic planning. All the points mentioned by Mr. Lamido struck the cord, and he must not allow IMF under any circumstance to dictate the exchange rate of our currency. The IMF has become an instrument for developed nations such as US to stifle the economy of upcoming nations. Nigeria and Argentina got sucked in to this game in the past and are yet to recover. If Nigeria falls to that trick again, it will be the end of civilization for Nigeria regardless of the price of oil because it will not matter
The governor of CBN Mr. Lamido must pressure the government for infrastructure build up to facilitate industrial development. It is the growth of our economy that will determine the rate of Naira exchange and not IMF. We need refineries to stop importation of fuel, we need constant power supply, and the government must have policies that encourage economic growth and investments in the private sector.
OMOTAYO, J. A. Lagos, NIGERIA February 21, 2011
Thank you Mr. Lamido. Your points are very clear. The IMF can only fool those who obtain certificates without knowledge. The greatest institutional problem of the world today is the IMF. There is no country where the IMF has its hold that is not in a debt / financial crisis. Nigeria cannot afford to be misled again by the IMF. It was the IMF that made the IBB regime to introduce First Tier Foreign Exchange Market, Second Tier Foreign Exchange Market, Foreign Exchange Market, Open Market Operations, etc under the destructive Structural Adjaustment Programme (SAP) policy thrust. The information then was that the Naira was overvalued at abour N0.68 : $1.00. Today, the outcome is clear: over 800 major industries then existing have closed down. The Naira : Dollar rate has thumbled from N0.68: $1.00 through N1.00 : $1.00, N2.00 : $1.00, N8.50: $1.00 to N151.00 : $1.00 today.
What else does the IMF want after crippling the Nigerian economy?
God bless Nigeria.
Paul I. Adujie New York City, United States February 21, 2011
I thank Governor Sanusi Lamido Sanusi for his reasoned stance against IMF attempts at manipulating our economy.
I thank you as well Mr. Omotayo for your clarity of thought and response up there to Governor Sanusi actions.
