₦airaland Forum

The International Monetary Fund (IMF) yesterday called for further devaluation of the naira as a way of adjusting to the reality of current economic conditions. Speaking at a press conference, IMF African Department Representative, Ms Antoinette Sayeh said the adjustment is necessary in order to ease tension for private sector investments. She said forex flexibility plays very important role for investors and their investments.

The CBN already devalued naira twice since the beginning of the forex crises due to the fall in crude oil prices and it believed that it has done enough meet the yearning of the private sector.

The value of the naira dropped by about 20 percent since the forex crises last year. “We hope there will be an opportunity for further review by Nigerian authorities,” she said.

Sayeh said Nigeria and Angola, with six other oil-producing nations in Africa, have been seriously hit by the global drop in oil prices.

http://newsday.com.ng/imf-calls-for-nairas-further-devaluation/

Cc. Lalasticlala

In all honesty, this is the last time I'll ever believe what Nigeria politicians say during campaign. Buhari was my last hope but so far I'm not impressed

I had some high really expectation on him regarding our naira value

IMF is looking for customers, this Shylock inhuman organisation will simply put you back to slavery.

The surest way to go.

1983 is replaying all over again. Nigeria will not devalue its currency. Let IMF and other western institutions continue their support Naira devaluation.

IMF, we are not devaluating. We can determine our own economic policies. QED.

She said forex flexibility plays very important role for investors and their investments.

There are two kinds of investors: (1) Portfolio Investors and (2) Real Investors.

The first group are only interested in Financial Assets. The equities & fixed income market is their playground. These folks need guarantee of FOREX so they can quickly exit the country at the slightest sign of a market crash or downturn.

The second group are interested in the real sectors of the economy. They build infrastructures, factories, plants and employ huge labour. They are in for the long haul, so they are not as desperate as the first group.

I have a sneaky feeling that the IMF is pushing for the interest of the first group.

The name Mohammadu Buhari is synonymous to disaster, since he took over power everything has been down down, but the true children of God must survive, even if we go back to using cowries, as a means of exchange .

In the face of dwindling Forex revenue (due to falling oil prices), the options available to the CBN include, but not limited to:
(1) Dip into the Foreign Reserves to meet dollar demand
(2) Depreciate the naira to curb dollar demand
(3) Suspend certain items from accessing CBN dollars
(4) Borrow dollars (SDR) from IMF

We have already pushed option 1 too far and if we continue, we'll soon run out of reserves. Not having dollars to fund imports and payments would have catastrophic consequences.

Option 2 appears most logical and the lesser evil, but there are political reasons for not exploring that option - a new government has just come in. This option will cause inflation and economic hardship, so the new govt does not want to become unpopular so quickly.

Option 3 (which the CBN has chosen) is a form of capital control and is usually frowned at by foreign investors. This may also hurt local manufacturers who depend on imported raw materials for their manufacturing/production. If they can't access dollars to import raw materials, they may have to cut operations with attendant job losses.

Option 4 is a no go, since the country would have to deal with so many crazy conditions from the IMF.

In my opinion, the CBN governor is practically holding the economy (using option 3) all by himself just to buy time for the president to constitute his cabinet. On two different occasions, the CBN governor has stated the need to have Fiscal Policies to complement Monetary Policies. This, to me, is an indictment on the president for not having his Economic Team in place.

If things do not improve quickly, the CBN governor might be constrained to switch to option 2 to prevent manufacturing from suffering.

I am a huge supporter of the president, but on the economy, his performance is short of being abysmal. Yes, he is blocking leakages, ensuring accountability, ensuring prudent management, etc. But these things can run concurrently - they are not mutually exclusive.

THANK GOD

IMF again!!. Anyway its still just a suggestion

I have said so long ago, we are only postponing the evil day, instead tackling the economic crisis headlong our leaders are behaving like the proverbial ostrich burying thier head in the stand, thinking that raw populism of CHANGE will bail us out.

AuntySusan:
In all honesty, this is the last time I'll ever believe what Nigeria politicians say during campaign. Buhari was my last hope but so far I'm not impressed

What is the premise of what u just said and it's connection to the story??

Has the naira being devalued during PMB's tenure??

Bevista:
There are two kinds of investors: (1) Portfolio Investors and (2) Real Investors.

The first group are only interested in Financial Assets. The equities & fixed income market is their playground. These folks need guarantee of FOREX so they can quickly exit the country at the slightest sign of a market crash or downturn.

The second group are interested in the real sectors of the economy. They build factories/plants and employ huge labour. They are in for the long haul, so they are not as desperate as the first group.

I have a sneaky feeling that the IMF is pushing for the interest of the first group.

Thank u for this explanation. I learnt from it. This is the time all Nigerians need to join hands with PMB'S govt and tell the IMF off! We can chart the path for our own economy just like China's.

With the way IMF is insistent on shoving this devaluation down our throat, I can see why a lot of big names that earlier worked with these organisations (IMF & World bank) never performed wonders with our economy.

At this point in time, we need no big name and big CV that has any relationship whatsoever with these devils (IMF/world bank). What we need is local intelligence.

The Chinese, Singaporeans, Indonesians all engaged their local intelligence in solving their economic quagmire.

All the former this and that of IMF/world bank that worked for us, has already been radicalised in IMF/world's bank approach and doctrine and just unknowingly did the bid of their masters to the detriment of the Nigerian economy. What they gave us is an economy that grows only on paper and not in the real sense.

This growth is not noticeable on the citizenry and their daily lives.

Bevista:
There are two kinds of investors: (1) Portfolio Investors and (2) Real Investors.

I think the reason for this is captured in this explanation from Bevista. The investors/investments that these former IMF gurus has been bringing are portfolio investments and not real investments that has a direct bearing on the lives of our citizenry!

I like the fact that we are already tilting towards China. Although we have to play smart with them as well, as they are very cunny.

The Chinese are investing heavily in our real sector. From building roads, railways, bridges, powerplants to investing massively in our telecommunication sector. Despite these strong commitments, they are not singing devaluation like a bird the way IMF is doing.

Welcome to the change

this buhari is bad news to nigeria

Bevista:
There are two kinds of investors: (1) Portfolio Investors and (2) Real Investors.

The first group are only interested in Financial Assets. The equities & fixed income market is their playground. These folks need guarantee of FOREX so they can quickly exit the country at the slightest sign of a market crash or downturn.

The second group are interested in the real sectors of the economy. They build factories/plants and employ huge labour. They are in for the long haul, so they are not as desperate as the first group.

I have a sneaky feeling that the IMF is pushing for the interest of the first group.

Yes, the IMF has always been for the first group for unserious countries (like ours) that always run to these people to help get 'sharp sharp' investors. The guys at Bretton Woods are businessmen and not jokes. Don't be fooled with their sugar-coated words.

For any country to grow, they need to attract the second group by putting together formidable team to come up with sound fiscal policies that will attract this group(second). Once that is in place, the first will have no other choice than to invest in the economy without the country sacrificing their value.

At present, no such policies exists! This leaves us at the mercies of IMF's dictates in order to get 'investors'.


God Bless Us

Bevista:
In the face of dwindling Forex revenue (due to falling oil price), the options available to the CBN include, but not limited to:
(1) Dip into the Foreign Reserve to meet dollar demand
(2) Depreciate the currency to curb demand
(3) Suspend certain items from accessing dollars
(4) Borrow dollars (SDR) from IMF
(5) etc.

We have already pushed option 1 too far and if we continue, we'll soon run out of reserves. Not having dollars to fund imports and payments would have far reaching consequences.

Option 2 appears most ogical and the lesser evil, but there are political reasons for not exploring that option - a new government has just come in. This option will cause inflation and economic hardship, so the new govt does not want to become unpopular so quickly.

Option 3 is a form of capital control and is usually frowned at by foreign investors. This may also hurt local manufacturers who depend on foreign raw materials for their manufacturing/production. If they can't access dollars to import raw materials, they may have to cut operations with attendant job losses.

Option 4 is a no go, since the country would have to deal with so many crazy conditions from the IMF.

In my opinion, the CBN governor is practically holding the economy (using option 3) all by himself to buy time for the president to constitute his cabinet. On two different occasions, the CBN governor has stated the need to have Fiscal Policies to complement Monetary Policies. This, to me, is an indictment on the president for not having his Economic Team in place.

If things do not improve quickly, the CBN governor might switch to option 2 to prevent manufacturing from suffering.

I am a huge supporter of the president, but on the economy, his performance is short of being abysmal. Yes, his blocking leakages, ensuring accountability, ensuring prudent management, etc. But these things can run concurrently - they are not mutually exclusive.

Mr, before choosing a strategic option you first do a strategic review. I believe that is what is happening. The perm secs in the ministry of finance are not sleeping and if you look closely you will find that there is a clear implied economic policy which is to ensure that our reserves are protected and real manufacturing can continue. There is controlled capital movement etc. You are partly correct that we are on Option 3 but with enough allowance and window for critical manufacturers imports. So we are doing the right things under the current circumstances.

since buhari dey romance America.. make him no go yield to dier demand oh

TonyeBarcanista:
Yes, the IMF has always been for the first group for unserious countries (like ours) that always run to these people to help get 'sharp sharp' investors. The guys at Bretton Woods are businessmen and not jokes. Don't be fooled with their sugar-coated words.

For any country to grow, they need to attract the second group by putting together formidable team to come up with sound fiscal policies that will attract this group(second). Once that is in place, the first will have no other choice than to invest in the economy without the country sacrificing their value.

At present, no such policies exists! This leaves us at the mercies of IMF's dictates in order to get 'investors'.


God Bless Us

Very good points here. But surely you can't expect this government to rush into a fiscal policy without a thorough review of our current position? My organisation's strategic review took 7 months and here we are talking about a country of 170m people and immediately following a depraved and disastrous GEJ regime? I would feel less confident if Buhari had rushed out with policies prior to doing a whole scale review of our current socio-economic position.

ibedun:
Mr, before choosing a strategic option you first do a strategic review. I believe that is what is happening. The perm secs in the ministry of finance are not sleeping and if you look closely you will find that there is a clear implied economic policy which is to ensure that our reserves are protected and real manufacturing can continue. There is controlled capital movement etc. You are partly correct that we are on Option 3 but with enough allowance and window for critical manufacturers imports. So we are doing the right things under the current circumstances.

I agree with the CBN policy at the moment and have spoken in their defense in various fora. However, we need to appreciate that this is only a stop-gap measure. If there are no right Fiscal Policies to ensure that there is local production to supplement the suspended items, then the inevitable will occur - the CBN will have to reverse itself and go back to option 2 (devaluation) or we face production cuts from these manufacturers.

Production cuts will lead to job losses, lower profits, lower taxes, lower supply contracts, etc. All these will deepen the economic slowdown and might ultimately lead to a recession. Remember, the CBN governor has warned that we might enter into a recession if things are not done quickly.

agabusta:
What is the premise of what u just said and it's connection to the story??

Has the naira being devalued during PMB's tenure??

But he used the naira value issue during campaign
He's now in charge yet naira is going down

AuntySusan:
But he used the naira value issue during campaign
He's now in charge yet naira is going down

Naira has more value now than towards the end of GEJ era.

AuntySusan:
In all honesty, this is the last time I'll ever believe what Nigeria politicians say during campaign. Buhari was my last hope but so far I'm not impressed

I had some high really expectation on him regarding our naira value

Liar. I just went through your posts. You never supported Buhari!

Bevista:
I agree with the CBN policy at the moment and have spoken in their defense in various fora. However, we need to appreciate that this is only a stop-gap measure. If there are no right Fiscal Policies to ensure that there is local production to supplement the suspended items, then the inevitable will occur - the CBN will have to reverse itself and go back to option 2 (devaluation) or we face production cuts from these manufacturers.

Production cuts will lead to job losses, lower profits, lower taxes, lower supply contracts, etc. All these will deepen the economic slowdown and might ultimately lead to a recession. Remember, the CBN governor has warned that we might enter into a recession if things are not done quickly.

We are a dependent economy. All our consumption are based on foreign imports which itself is underpinned by oil receipts. Now that the oil price has collapsed and our main risk has materialised with the only mitigating factor being our very modest reserves, the government is doing the best it can. Our best outcome under the current scenario is to keep plodding along without running into problems that could lead us to borrowing from the IMF or other western institutions. We are still selling oil albeit with reduced income naturally we consume and import less. No amount of fiscal policy plans can change the current policy action.

The GEJ government are fully responsible for where we are. It is really tough being born into this world an African. It is almost like we are brainless, thoughtless and slave born. Funny thing is I was at the ports 3years ago and just looking at the consignment of expensive vehicles being offloaded and I knew we were already in big trouble.

ibedun:
No amount of fiscal policy plans can change the current policy action.

The GEJ government are fully responsible for where we are. It is really tough being born into this world an African. It is almost like we are brainless, thoughtless and slave born.

@ the bolded. Nothing could be further from the truth. There is a lot Fiscal authorities can do to improve the current situation or, at the very least, prevent it from getting worse.

There needs to be clear policy initiatives on various sectors of the economy. Take Palm oil as an example - if that commodity is banned from CBN export list, it will be good to hear what government is doing to ensure that local production is ramped up to meet industry needs. Do we have high yield seedlings to provide to farmers for planting? Can we provide loans to enable farmers engage in mechanized cultivation? What support are we providing entrepreneurs to set up oil processing plants? etc.

There has to be a deliberate & comprehensive fiscal strategy in every sector of the economy. The ministry of Agriculture, Finance, Trade/Investments, etc should be communicating what the policy strategies are. Government needs to communicate what their fiscal priorities are, so that investors (currently sitting on their hands) can begin to position their investments. The problem is that there is a deafening silence on the economic front from this government.

Also, please note that every new government inherits the Assets & Liabilities of previous governments. The Jonathan administration story has been regurgitated so many times, it is becoming stale. PMB is now the president. He said he came in to correct the wrongs of the past - let him just get on with the job.

fyneguy:
Liar. I just went through your posts. You never supported Buhari!

How do u measure those that voted who?

Support means Forming a thug on the internet?
I feel for our youths really