The Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, has said that maintaining stable exchange rate to avoid depreciation of the naira is better than building foreign reserve buffers.
Emefiele told the press on Sunday that this was part of the outcome of the Nigerian delegation’s meetings with investors and institutions at the International Monetary Fund and World Bank Group Annual Meetings in Bali, Indonesia.
He said that all frontiers and developing markets had suffered not just depreciation, but had also lost reserves.
According to Emefiele “We are very conscious of the need to build buffers; but unfortunately, I must say that we are in the period where it will be difficult to talk about building reserve buffers.
“We can only build reserve buffers if we want to hold on to the reserves and then allow the currency to go, and wherever it goes is something else.
“So, it is a choice we have to make and at this time, the choice for Nigeria is to maintain a stable exchange rate so that businesses can plan and we do not create problems in the banking system.”
According to him, like other emerging markets, Nigeria has also lost reserves but only marginally because it has managed to sustain stability in its foreign exchange market.
The CBN governor said the IMF and the World Bank advised that nations should build country-specific policies and fiscal and structural reforms that would boost economic growth.
The Minister of Finance, Mrs Zainab Ahmed, said the World Bank’s Human Capital Development Index ranking, which rated Nigeria low at 44 per cent on stunting, was disheartening and depressing.
She, however, said that the Federal Government saw the rating as a wake-up call.
Ahmed stated, “We admit that this pervasive action was due to long years of under-investment in human capital, which we have before now realised and for which we have been addressing.
“Apart from major policy actions, some decisive actions are being taken to address the situation.”
According to her, the delegation held meetings with two rating agencies, Fitch and Moody’s, and presented to them the summary and synopsis of the recent economic and financial developments in Nigeria.