Forex crisis: Atiku offers his statesman's idea on how to prevent further Naira decline
The People’s Democratic party’s 2023 presidential candidate, Atiku Abubakar has faulted the president Tinubu for Nigeria’s currency continuous free fall.
Atiku also said that the president has no “clear idea on how to address the problem of the forex exchange market”.
The former vice president, according to his 2023 presidential campaign policy document titled: “My Covenant With Nigerians”, encouraged a managed-floating forex exchange system that ensures sufficient FX reserves.
Atiku said “the government has demonstrated sufficient poverty of ideas to redeem the situation” faced by average Nigerians.
“Rather, he told the country and experts who have been offering ideas on how to resolve the crisis that he and his team should not be distracted and allowed time to continue cooking their cocktail that has brought untold hardship to the people of Nigeria. I don‘t agree with that,” he noted.
“The rest of us cannot keep quiet when, clearly, the government has demonstrated sufficient poverty of ideas to redeem the situation.”
Offering solutions, Atiku said, “If the government will not hold on to their usual hubris, there are ways that the country can walk out of the current crisis.
“After a careful assessment of the state of our economy at the twilight of the last administration, I knew full well that the economy of the country was heading for the ditch and came up with a number of policy prescriptions that would rescue the country from getting into the mess that we are currently in.
“Those ideas, encapsulated in my policy document titled: My Covenant With Nigerians made the following prescriptions:
“I had signed on to a commitment to reform the operation of the foreign exchange market. Specifically, there was a commitment to eliminate multiple exchange rate windows.
The system only served to enrich opportunists, rent-seekers, middlemen, arbitrageurs, and fraudsters.
“A fixed exchange rate system would be out of the question. First, it would not be in line with our philosophy of running an open, private sector friendly economy. Secondly, operating a successful fixed-exchange rate system would require sufficient FX reserves to defend the domestic currency at all times.
“But as is well known, Nigeria’s major challenge is the persistent FX illiquidity occasioned by limited foreign exchange inflows to the country. Without sufficient FX reserves, confidence in the Nigerian economy will remain low, and Naira will remain under pressure. The economy will have no firepower to support its currency. Besides, a fixed-exchange rate system is akin to running a subsidy regime!
“On the other hand, given Nigeria’s underlying economic conditions, adopting a floating exchange rate system would be an overkill. We would have encouraged the Central Bank of Nigeria to adopt a gradualist approach to FX management.
“ A managed-floating system would have been a preferred option. In simple terms, in such a system, the Naira may fluctuate daily, but the CBN will step in to control and stabilise its value. Such control will be exercised judiciously and responsibly, especially to curb speculative activities,” he added.
Forex crisis: Atiku offers his statesman’s idea on how to prevent further Naira decline trading
