In a series of analytical submissions triggered by the interview of the Central Bank of Nigeria (CBN) governor, Mr Yemi Cardoso with Arise Television on Monday, a former Minister of Information and 2023 governorship candidate of the All Progressives Grand Alliance in Enugu State, Frank Nweke Jr, and some financial experts have explained how the Federal Government can consolidate the string of decisive reforms being implemented by the apex bank to fix the country’s demoralising Forex crisis and its attendant free fall of the naira.
During the Arise TV interview, the CBN governor had said about $2.4 billion out of the reported $7 billion outstanding foreign exchange liabilities of the federal government are not valid for settlement.
He said the apex bank had settled verified FX requests, which amounted to $2.3 billion, and that the current total outstanding FX obligations, which stood at $2.2 billion would be addressed soon.
But in their various reactions after the interview, the former Minister and other financial experts said moving the country out of its current mess requires not just the CBN speedy reforms, but also a constructive political will from the presidency with effective collaborations from other agencies of the Federal Government.
“We cannot ‘policy’ our country out of the current mess without commensurate implementation and operational efficiency across the board. I am eager to see the plans to improve fiscal conditions and encourage macroeconomic growth from Chief Wale Edun, the Minister of Finance and Coordinating Minister of the Economy,” the former minister stated
According to him, one critical point from Mr Cardoso’s is the need for synergy between all monetary, fiscal, and other economic actors to address the challenging conditions of the Nigerian economy.
He said as the CBN ramps up efforts to stop the hoarding and speculation by Deposit Money Banks, the federal government must also address the foundational issues plaguing the country by blocking the leakages, restoring security, stopping looting, diversifing the economy, and ?mitigating the pressure on Naira.”
“All hands have to be on deck, or else, these measures to drive the Naira appreciation will not achieve the desired economic impact for the people,” he added.
In his own submission, Mr Kelvin Emmanuel, a Director and Board Member at Obsidian Archenar Nigeria, said the President Bola Tinubu’s government, if truly determined to end the current crisis, should wholly back the CBN governor’s initiatives and ignore the bankers’ committee.
“Dr Yemi Cardoso should not fold. The CBN Governor answers to the president and not to anyone else. If the president really means business, he should back the governor and ignore the bankers’ committee,” the economist said.
According to him, “This is also a good time for the Senate and House Committees on Banking to start amendment of the foreign exchange act.
If we are really serious, by Monday morning trade & exchange, banking supervision should be talking about discretionary CRR debits and outright suspension for DMBs that fail to bring their net open positions on long USD to prudential limits. We talk a lot about government, but the banks are part of the problem,” he added.
Also reacting, a financial analyst, Kalu Aja, said the Federal Government can truly get enough dollars from many Domiciliary accounts without expressly creating national panic that will worsen the current challenge.
“The FGN get dollars from the Domiciliary account by creating a $ denominated bond, issued locally by the Debt Management Office or CBN, offering a rate higher than the US Fed rate.
“These bonds will attract Nigerians because they eliminate exchange risk and pay $ dividends. Many may accept the offer.
“Whoever advises that any government can steal assets it does not own is an ignorant appropriation of wealth. Please cease and desist,” he warned.
He stressed that “should the government touch the domiciliary accounts, the flow of private remittances to the CBN, averaging $5bn a month, would immediately and completely dry up. The Government will “gain” $25b to $30b immediately and then lose $5b monthly.”
According to him, “If private assets are targeted, Nigerians and foreigners will shun all Nigerian bonds, including Eurobonds and the Pension scheme. The thinking is simple: if Domiciliary accounts can be taken at will, everything else can be accepted.
“Operationally, banks do not keep cash in vaults to stare at the money; banks invest your cash, and that’s how banks earn interest income that pays salaries and dividends. Banks keep liquidity to meet withdrawals, which is all,” he tweeted.
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