A fter months of insisting that he had no plans
to devalue the naira, President Muhammadu
Buhari has caved to pressure to change
course; SaharaReporters has learned from an
exclusive briefing by a few top aides of the
president.
A day after the Buhari administration
increased the price of the pump price of fuel
by 67%, from N86.5 to N145 a liter, our
sources disclosed that Mr. Buhari has also
agreed to demands by the International
Monetary Fund (IMF) that he significantly
devalues the Nigerian currency. Our sources
indicated that the naira would be pegged at
N290 to one dollar. The current official rate is
about N200 to a dollar.
Our sources said Mr. Buhari and his economic
team took the decision to accept the IMF’s
terms for funds that the Nigerian government
wants to access to bridge a critical shortfall
in revenue occasioned by a drastic decline in
oil revenues. An administration insider told
SaharaReporters that Nigeria could receive as
much as $3 billion in credit facilities from the
IMF.
“The truth is that Nigeria cannot operate
without sourcing credit from the IMF,” said
one of our sources, an economic adviser to
Mr. Buhari, who spoke on condition of
anonymity. “And the IMF was adamant that
we must devalue before they can discuss
extending credit to us,” he added.
Curiously, administration officials took the
decision to devalue the naira without the input
of the Governor of the Central Bank of Nigeria
(CBN), Godwin Emefiele, another source
revealed. An official of the CBN confirmed to
Saharareporters that bank executives were
kept in the dark about the discussions that
led to the Buhari administration’s decision to
devalue the naira. “Some of us here [the CBN]
are not opposed to devaluation, given our
country’s present circumstances,” the source
said, adding that it was the CBN’s function to
pilot Nigeria’s monetary policies.
One of our sources pointed to the fact that
the naira has been weakened in the parallel
market, where it now sells at N360 per dollar.
“The government cannot continue to operate
under the illusion that the naira is stronger
than it is. The only problem is that we did not
start early enough to admit to Nigerians how
bad the financial outlook was,” the source
added.
The Nigerian economy has been pummeled by
falling oil earnings that have led to a near
collapse of the economy. The IMF had long
indicated its readiness to support Nigeria’s
economy with credit liquidity but insisted on
Nigeria devaluing its currency. President
Buhari had insisted on numerous occasions,
before and after his election, that he would
never devalue the naira.
It is unclear how Mr. Buhari and members of
his economic team plan to justify the about-
turn on devaluation and other policy
somersaults. After initially vowing to reduce
the price of fuel, the government yesterday
announced a significant hike in fuel price. The
administration also set to announce a 10%
increase in value-added tax (VAT), another
indication that the Buhari government was
embracing the kind of liberalization pushed by
the IMF.
To compound dwindling oil prices, militants in
the oil-rich Niger Delta region have crippled oil
exports substantially after bombing oil
pipelines and issuing threats to oil companies
to leave the region.
Last week, several oil companies evacuated
essential staff from the region’s offshore
platform leading to a reduction in daily oil
outputs from 2.2 million barrels a day to 1.3
million barrels a day. http://saharareporters.com/2016/05/13/buhari-bows-imf-pressure-devalue-naira-290-dollar

G

Na revolution go end all these insanity.