If Nigeria increases local production of products and services, it will review the exchange rate, Central Bank of Nigeria (CBN), Governor Godwin Emefiele has said.
Emefiele was responding to the advice of the International Monetary Fund (IMF) to review its exchange rate policies.
The CBN governor revealed this on the sideline of the hybrid 2022 spring meetings of the International Monetary Fund and the World Bank in Washington DC, United States on Thursday.
“When we raised the issue of over 43 items (excluded from the forex window), it had an impact on exchange rates and what we are doing is to put in place some intervention mechanisms to regulate the exchange rate. As long as demand for foreign exchange exceeds supply, we will continue to have these challenges.
“We have put some demand management policies which they do not like, the policies will be reviewed but we want to deepen the production of these items in Nigeria before we begin to review them,” Emefiele explained.
According to Emefiele, the IMF intervened in 2020, when the Risk-free rates (RFR) to all countries affected by the COVID-19 pandemic benefited Nigeria about $3.4 billion.
“In 2021, we received another fund of over $3 billion under special drawing rights. Our resolution at the IMF is that we always want them to understand our peculiar issues.”
He also said he has responded to the decision by airlines to receive payments for international flights in dollars. “I have called them to tell them this is illegal to sell air tickets in dollars because it will polarize the economy and they have withdrawn that so I urge people to continue their business as it were.”
Emefiele spoke on the 2023 general elections, saying: “at the Central Bank, we remain focused on our job and we are happy that we are playing our role in supporting the Nigerian economy. We have been at this since 2015, when inflation rate was almost at 19 per cent, it came down to almost 11 per cent. Because of the increase in energy prices and electricity prices, it went up to almost 18 per cent again and we have managed to bring it down to below 16%.”
He said the bank was putting in place facilities to support households, businesses and others at single-digit interest rates, noting that the IMF has held a positive position about Nigeria’s growth prospect at 3.4%.