The Governor of Nigeria’s apex bank (CBN), Godwin Emefiele speaking on Thursday at the ongoing World Bank /IMF meetings in Washington DC listed some terms and conditions which are needed to facilitate the drop in the demand in dollar and also help stabilize the Nigeria’s exchange rate.
The president of world bank group, David Malpass, president, had advised Nigeria to rethink the provision of N4 trillion for petrol subsidy payments in the 2022 budget.
Malpass made the advise during the opening press conference of the 2022 IMF-World Bank spring meeting.
Malpass however further said the provision of petrol subsidy in Nigeria is not targeted at those most in need, encouraging Nigeria to rethink its subsidy effort.
Speaking during the conference, Emefiele said 40 percent of Nigeria’s forex needs to goose to imports of petrol, rice, sugar and wheat.
The Governor said that the Central Bank has put in place good policies that guarantees gradual refining of petroleum products locally and to also stop of rice import.
According to him wheat consume 40 per cent of forex compare to the import of refined petroleum products needed to fund imports in Nigeria.
The CBN boss explained that Nigeria operates a managed float exchange rate regime, adding that Nigeria is currently developing homegrown solutions to fix its exchange rate challenges.
Emefiele stressed that Nigeria has to work towards developing it own homegrown solution inline with the country’s problem.
The Governor also said that the country is managing a float exchange rate regime, saying that Nigeria at this time cannot adopt free float policy that is being proposed saying doing that will create an exchange rate spiral for Nigeria, as long as demand surpasses supply of foreign exchange in Nigeria
According to Emefiele, Nigeria’s exchange rate problem has persisted since 1986 and that CBN is doing something to adjust the currency.
The Governor said in line with the bank’s efforts of adjusting prices, the bank is also working towards a better demand and supply ensuring that those things that are produce locally, are not imported, in other to make sure that demand for foreign exchange will reduced and will also ensure that prices do not rise beyond expectations of Nigerians.
He explained that the apex bank has done a lot of interventions in agriculture leading to the cut in the import of rice and maize. He also added that with the coming of Dangote refinery, refining 650,000 barrel of oil a day, it will also reduce the volume of forex used in petrol import.
Naira now exchanges at N489 to dollar at the parallel market and N416.08 to dollar at the official market.