Financial experts yesterday advocated the adoption of more drastic measures by the Central Bank of Nigeria to stem further slide of the Nigerian currency. ?
The experts, Dr Godwin Owo and Alhaji Abubakar Abdulkadir spoke in an exclusive interview with LEADERSHIP SUNDAY against the recent injection of surplus foreign currencies into the Nigerian market. ?
Dr Owo, who is the executive chairman of the Society for Analytical Economics, Nigeria, a policy think tank, pointed out that the CBN needed to adhere to a strict monetary policy to arrest the continuous depreciation of the Nigerian currency.? ?
Dr Owo said the source of the bailout funds was responsible for the current crisis and pointing that the CBN should have stabilized interest exchange and inflation rates before the bailout.? Dr Owo said: “The bailout funds should have come from generated revenue, internal reserves or liquidity injection. Some of us were surprised when the CBN admitted that the money injected into the banks came from the treasury money when the economy was in recession.” ?
He said, “A lot of the banks conserved it and used it to attack the Naira. They went back to round tripping without the CBN knowing it. They had cheap money and went back to their game of buying US Dollars. That was why there was no lending.”
Dr Owo also questioned why the CBN had not shown the same kind of willingness in bailing out other privately owned businesses in different sectors of the economy that have collapsed, citing the textile and manufacturing industries as examples.? ?
Abubakar Abdulkadir, a former permanent secretary of the ministry of finance on his part believes the Naira may have to be re-denominated in the long run and said that “the CBN has rightly released a number of hard currencies in order to support the Naira, I think it is the right thing to do. “
Abdulkadir said, “Some degree of greater intervention may be necessary in this situation. But at the moment, let us watch the market and see what the Sanusi intervention will produce. If it stays below N150 or rather at N150 per $1 for a long time, the imortant thing is that we must have stability.”
Abdukadir? said, “By merely sustaining a cosmetic situation like this, I do not think it will answer the question.