Traveling To UAE, India, New York Not Enough To Fix Nigeria’s Forex Problem, IMF Tells Tinubu

The International Monetary Fund (IMF) has said that President Bola Tinubu’s overseas trips to market Nigeria are not enough to bring in the needed foreign exchange liquidity that would salvage the naira from crashing against the US dollar.

Ari Aisen, IMF Resident Representative to Nigeria said on Tuesday that the administration should also focus on reducing the number of naira in the economy.

On Tuesday, the naira traded at N1,000 per dollar at the unofficial market and N773.25 at the Nigerian Foreign Exchange Market.

Money Supply (M1) declined from N24.02trn in August 2023 to N24.16trn in July, according to official data.

The IMF representative acknowledged the efforts from the government in the past months trying to bring more supply of foreign exchange into the market.

But Aisen said, “Advertising Nigeria abroad through successful visits to India, to the UAE, now in New York, it’s very important that the image of Nigeria and its potential can come across very clearly to all stakeholders, investors, local and abroad.

“But a lot of the focus should also be in supply of Naira, not only on the supply of foreign exchange. Here is what we have been saying for quite some time, the need of tightened monetary policy.

“Taking liquidity out of the system. There are too many Naira chasing yet too few dollars, as I have alluded before in previous conversations. It’s very important to reduce the amount of Naira, reduce the growth rate of money supply domestically in Nigeria.”

The Central Bank of Nigeria has floated the currency and harmonised the foreign exchange market windows into the Nigerian Foreign Exchange Market, formerly I&E FX Window as recommended by the IMF and the World Bank.

Aisen said the fiscal policies should cease to rely on the ways and means adding “we have heard that this is so far taking place this year.

“There are some legacy issues, but phasing out all the operations of the Central Bank that are not conducive to reining liquidity in the volume of Naira in the economy. Phasing out financing of the fiscal deficit of the government.”