₦airaland Forum

davidif:
You truly don't understand the economics of devaluation do you? In other to keep your currency artificially high we have to burn through our reserves. How smart is that? That's why this people have been saying just leave it and let the market determine the value of the make a instead of the CBN artificially trying to do that because it comes at a significant price.

It is better you give an open mind if you really want to learn. Leave this devaluation of economics.

davidif:
You truly don't understand the economics of devaluation do you? In other to keep your currency artificially high we have to burn through our reserves. How smart is that? That's why this people have been saying just leave it and let the market determine the value of the make a instead of the CBN artificially trying to do that because it comes at a significant price.

You better get your CVs ready and apply for work at the CBN or and ministry of finance, cause you're the only person in the world who understands our economic problem and can certainly solve it. What are you waiting for?

I'll like to remind you that obedience to the world bank and IMF instructions to the letter has led many third world countries to mass poverty all over the world. In Nigeria, in the 80's, it led to the dreaded SAP (structural adjustment program) during IBB's regime. Our obedience to the world bank and IMF got the Naira devalued over 500% over time, leading to more poverty and mass starvation. We fell into debt huge enough we couldn't service it anymore as we got to the point where we had to use all our national revenue to service debt and could no longer build schools, hospitals, roads, pay salaries, e.t.c. It took the regime of Obasanjo that innitiated the "cancel the debts" effort to get us out of the mess. Is that what you want?

Tahtah:
You devalue wen you have exports. This makes your exports cheap to the consuming countries, thereby having a surplus BOP, or to some extent balanced BOP. IMF wants market to determine the exchange rate while we have deficit BOP- our country is a consuming one. We mainly export primary products this will not give good value. IMF also wants us fix social n physical infrastructure which can not be achieved 20years time. This infrastructural devt will bring about economic growth n devt. Hence we will be able to maintain floating exchange rate. If we allow the market to determine the exchange rate, the poor will suffer as we are having now cos the economy is not developed

isn't this what Venezuela did somewhat? Where are they bnow?

musicwriter:
You better get your CVs ready and apply for work at the CBN or and ministry of finance, cause you're the only person in the world who understands our economic problem and can certainly solve it. What are you waiting for?

I'll like to remind you that obedience to the world bank and IMF instructions to the letter has led many third world countries to mass poverty all over the world. In Nigeria, in the 80's, it led to the dreaded SAP (structural adjustment program) during IBB's regime. Our obedience to the world bank and IMF got the Naira devalued over 500% over time, leading to more poverty and mass starvation. We fell into debt huge enough we couldn't service it anymore as we got to the point where we had to use all our national revenue to service debt and could no longer build schools, hospitals, roads, pay salaries, e.t.c. It took the regime of Obasanjo that innitiated the "cancel the debts" effort to get us out of the mess. Is that what you want?

First of all, you are conflating so many things together in one statement.

Secondly, the imf has helped a lot of countries get out of their mess like Thailand, Mexico etc. The difference between then and us for the most part is that they were willing to make the hard choices required while we were not willing to do so.

Thirdly, The I.M.F is for the basket case economies. The countries that mismanaged there economy when things were good and they are now seeking cash now that there economy is in trouble.

There is a reason they are called the lender of last resort and that's because they are the ones you run to when no one else is willing to lend you money anymore.

davidif:
First of all, you are conflating so many things together in one statement.

Secondly, the imf has helped a lot of countries get out of their mess like Thailand, Mexico etc. The difference between then and us for the most part is that they were willing to make the hard choices required while we were not willing to do so.

IMF and world bank has also once led Nigeria, Indonesia, Malaysia, Zimbabwe, Brazil, Bangladesh, Argentina, Angola, Ghana, e.t.c to mass poverty. The last time we obeyed them, it didn't end well.

davidif:
isn't this what Venezuela did somewhat? Where are they bnow?

What does Nigerian economy have to export to keep a surplus BOP?

davidif:
Bros, you truly don't understand the economics of devaluation do you? In other to keep your currency artificially high we have to burn through our reserves. How smart is that? That's why this people have been saying just leave it and let the market determine the value of the make a instead of the CBN artificially trying to do that because it comes at a significant price.

Do not put words in my mouth or attribute to me what I have not said because you want to sound intelligent
no one is trying to keep the currency high or low. I do not know where I expressed an opinion on what the exhange rate should be or not be

The fact is that people need dollars for their business and their need is legitimate. Where is the contradiction bewteen a Central Bank selling dollars to legitimate buyers and allowing market forces to determine the price. I have not comented AT ALL on THE PRICE so stop talking nonsense
What is the purpose of reserves?? It is to pay for imports period. IT HAS NO OTHER PURPOSE. It cannot be spent because it has already been monetized



. It is not a savings account. How much does the US have in Foreign reserves??

You think you know when indeed you know nothing. are the foreign reserves not part of the market? If people want to buy then the CBN should sell . There is nothing to say they should sell below market value and I have not said that anywhere but hoarding it because of some emotional attachment to Foreign reserves is naive. Selling it at artifiially low rates is one thing selling at auction and getting best value is another

You talk of market forces so when the market force are at play which dollars would be sold if not oil receipts, How does the government fund its budget if not by monetizing its oil receipts?

musicwriter:
IMF and world bank has also once led Nigeria, Indonesia, Malaysia, Zimbabwe, Brazil, Bangladesh, Argentina, Angola, Ghana, e.t.c to mass poverty. The last time we obeyed them, it didn't end well.

Like I said earlier, you are conflating so many conflicting factors together just to make a point. Most of this things are not even correlated.
Secondly like I said earlier, the countries who mostly succeeded where willing to make hard and DIFFICULT choices to ensure the future prosperity of their country instead of kicking the problem down the road to there successor and hoping that tge problem would eventually go away if they ignored it enough.

Tahtah:
What does Nigerian economy have to export to keep a surplus BOP?

dude you are responding with a question. You still haven't answered my initial question. "Isn't this what Venezuela did?"

davidif:
Like I said earlier, you are conflating so many conflicting factors together just to make a point. Most of this things are not even correlated.
Secondly like I said earlier, the countries who mostly succeeded where willing to make hard and DIFFICULT choices to ensure the future prosperity of their country instead of kicking the problem down the road to there successor and hoping that tge problem would eventually go away if they ignored it enough.

Again, former Nigerian leader, Ibrahim Badamosi Babangida, in the 80's followed IMF and world bank instructions to the letter. What we got was mass poverty!. The Naira became useless!!. We ended up owning Billions of dollars in debt to the same world bank, IMF and their cronies. That's why Buhari overthrew the IBB regime among other things. So, we're not talking about what we haven't done before.

musicwriter:
Again, former Nigerian leader, Ibrahim Badamosi Babangida, in the 80's followed IMF and world bank instructions to the letter. What we got was mass poverty!. The Naira became useless!!. We ended up owning Billions of dollars in debt to the same world bank, IMF and their cronies. That's why Buhari overthrew the IBB regime among other things. So, we're not talking about what we haven't done before.

To the letter?? Hahajajaha yeah like looting and embezzling the economy? Like poor execution? Like stealing the money borrowed by the imf? Like refusing to invest in infrastructure like electricity, education etc to prepare the next generation to be competitive even though he knew the Nigerian population was growing? Do you want me to continue?

davidif:
To the letter?? Hahajajaha yeah like looting and embezzling the economy? Like stealing the money borrowed by the imf? Like refusing to invest in infrastructure like electricity, education etc to prepare the next generation to be competitive even though he knew the Nigerian population was growing? Do you want me to continue?

If corruption is your reason it didn't work last time, then its still a reason it would not work now.

davidif:
The imf are the lender of last resort while the world bank is not. The world bank is for long term loans (mostly for capital projects like infrastructure spending etc) while the imf is for short term loans (mostly emergency funds) so you see that both organizations are not competing for each other as they have different goals.

The imf is for basket case countries who have squandered there wealth in good times and are now desperately looking for cash. They are ones you run to when no one is willing to lend you anything anymore hence the reason they are called the lender of last resort.

True... you are right. I had to read this page here https://www.imf.org/external/pubs/ft/exrp/differ/differ.htm to get to this phrase:

Third, the IMF continues to provide short- and medium-term financial assistance to member nations that run into temporary balance of payments difficulties.

musicwriter:
If corruption is your reason it didn't work last time, then its still a reason it would not work now.

Exactly! The corruption the refused to allow it work then is still there even though Buhari through EFCC and ICPC are trying their so-called best.

deflover:
So since u can't provide names of your imaginary schools
We can now agree its a lie
You guys are just funny
You throw up dust
And when caught
U are forming i give up
Try being smart by half please

Okay sir!

#SMH

I will just say these:

foreign investors want the most naira for their dollar, that is the reason for the request for devaluation.

If you work abroad, and you bring dollar to Nigeria do you do good Nigerian and exchange your dollar at CBN rate or do you go to black market.

If you go to black market to get the most naira for your hard earned dollar or forex, why do you think a foreign investor will want a mumu-nified exchange rate from CBN.

Most often foreign investors don't mind if the diff between CBN and black market rates are minimal, but again, look at the last few weeks' magic by CBN.

While serious manufacturers and industries have been on queue for dollar for months, they are trying to prop up a minimal differential between black market and interbank even though the fundamentals of sustainable demand and supply has not been addressed.

They are just wasting time propping Nigerians' psyche and distracting the core conversation - let the market float!!!!

On whether devaluation makes us export more, that is only if government is willing to drive the economy to do so. It does not intend to.

It did not under Buhari (1984), IBB (1985-93), Obasanjo when oil prices fell as low as $9. If Oil price na babe, the herbalist wey she dey use control Fed Govt head na MVP.

Seriously, the Nigerian elites do not have an incentive to go through that long-run route because they are not adequately threatened by the Nigerian populace to build infrastructures, incentivize businesses, create jobs, federalize/ decentralize the economy to create jobs, goods and services from which the government can get a sustainably diversified revenue base.

So rather than do that, they give themselves contracts and import opportunities and keep the forex rates stratified to their convenience.

No be joke say person dey buy dollar with one phone call from the garden. But the issue is more complicated that it looks and the populist psyche of strong dollar is a very fringe aspect of this serious issue.

The naira is still coming back down, unless global productivity grows strong enough to outstrip available oil supplies. That is wishful these days. But I hope to be wrong.

davidif:
You truly don't understand the economics of devaluation do you? In other to keep your currency artificially high we have to burn through our reserves. How smart is that? That's why this people have been saying just leave it and let the market determine the value of the make a instead of the CBN artificially trying to do that because it comes at a significant price.

it is that economics that you feel you know that led us to recession. in July when we devalued our currency, our country began a journey to hell.
If reserves are burned for the short term, no problem. in the long term when our today's effort will yield fruit in the long term then we can think of devaluation.

I still repeat that devaluation has no benefit to an import dependent country

NubiLove:
IMF and world bank are two different organisations. Nigeria did NOT approach IMF because they want us to completely devalue our currency as a requirements for their loan ignoring the hardship that floating the Naira (complete devaluation) would cause on Nigerians.

I sure do recognize that IMF and the world bank are two diverse bodies

I initially thought the loan was sought from the IMF, but like you've rightly pointed out before: the IMF's gloomy prophesy is borne out of share "bad bele"... they can blab all they want we've got issues to address over here.

hero2000:
They also said Nigeria will split in 2015. Check your calendar. What year are we now?

one man made it not to happen.

davidif:
You truly don't understand the economics of devaluation do you? In other to keep your currency artificially high we have to burn through our reserves. How smart is that? That's why this people have been saying just leave it and let the market determine the value of the make a instead of the CBN artificially trying to do that because it comes at a significant price.

The last time CBN tried to allow the law of demand and supply to determine the price of naira, what happened? It went haywire, your assumption can't work bcus we are more or less a mono economic nation.

Therefore, without we being producing for export, we can't leave d naira to the law of demand and supply.

daneni1:
The last time CBN tried to allow the law of demand and supply to determine the price of naira, what happened? It went haywire, your assumption can't work bcus we are more or less a mono economic nation.

Therefore, without we being producing for export, we can't leave d naira to the law of demand and supply.

Wow! see reasoning? You have almost burnt up your cash reserves with this pathetic policy by the CBN and you are still egging them on despite the fact that you know that cash is not a finite resource. Do you even know what's going on with Venezuela right now? Have you bothered to find out what happens to countries in the long run who pursue ruinous policies because they are afraid to make hard decisions?
You can't keep blowing your savings trying to prop up the artificially prop up the value of your currency especially knowing that oil is not selling at the price it once was nor producing at relative capacity as we used to.

chukzyfcbb:
it is that economics that you feel you know that led us to recession. in July when we devalued our currency, our country began a journey to hell.
If reserves are burned for the short term, no problem. in the long term when our today's effort will yield fruit in the long term then we can think of devaluation.

I still repeat that devaluation has no benefit to an import dependent country

hahahaha, see logic. You do know money is not an infinite resource right? and that it eventually runs out. So if the CBN likes let them keep blowing there savings trying to artificially prop up the value of a currency and let's see how that will last considering the fact that oil prices are probably never going back up to pre-2015 levels again.

musicwriter:
If corruption is your reason it didn't work last time, then its still a reason it would not work now.

So we should keep on burning our cash reserves and be hoping for the best right?

You guys seem not to know that cash is a finite resource and that it eventually runs out.

aribisala0:
Do not put words in my mouth or attribute to me what I have not said because you want to sound intelligent
no one is trying to keep the currency high or low. I do not know where I expressed an opinion on what the exhange rate should be or not be

The fact is that people need dollars for their business and their need is legitimate. Where is the contradiction bewteen a Central Bank selling dollars to legitimate buyers and allowing market forces to determine the price. I have not comented AT ALL on THE PRICE so stop talking nonsense
What is the purpose of reserves?? It is to pay for imports period. IT HAS NO OTHER PURPOSE. It cannot be spent because it has already been monetized



. It is not a savings account. How much does the US have in Foreign reserves??

You think you know when indeed you know nothing. are the foreign reserves not part of the market? If people want to buy then the CBN should sell . There is nothing to say they should sell below market value and I have not said that anywhere but hoarding it because of some emotional attachment to Foreign reserves is naive. Selling it at artifiially low rates is one thing selling at auction and getting best value is another

You talk of market forces so when the market force are at play which dollars would be sold if not oil receipts, How does the government fund its budget if not by monetizing its oil receipts?

Wow! there is so much wrong with this statement that i don't even have time to unpack it but i will say this; In other to artificially prop up your currency you need to deplete your foreign cash reserves which Nigeria is doing but unfortunately cash is a finite resource (i.e it doesn't last forever). To now make matters worse, not too many people are buying our oil anymore and even if they did not at the prices we used to get back in the day meaning that our cash reserves are not as bountiful as they once were which makes the current CBN policy injurious in the long run. In other words, you can only buy so much time.

davidif:
Wow! there is so much wrong with this statement that i don't even have time to unpack it but i will say this; In other to artificially prop up your currency you need to deplete your foreign cash reserves which Nigeria is doing but unfortunately cash is a finite resource (i.e it doesn't last forever). To now make matters worse, not too many people are buying our oil anymore and even if they did not at the prices we used to get back in the day meaning that our cash reserves are not as bountiful as they once were which makes the current CBN policy injurious in the long run. In other words, you can only buy so much time.

People now quote me when they need to feel intelligent. You better go and play with yourself and never quote me in your life

aribisala0:
People now quote me when they need to feel intelligent. You better go and play with yourself and never quote me in your life

hahahaha, hillarious.

Kaslyni:
I sure do recognize that IMF and the world bank are two diverse bodies

I initially thought the loan was sought from the IMF, but like you've rightly pointed out before: [b]the IMF's gloomy prophesy is borne out of share "bad bele"... [/b]they can blab all they want we've got issues to address over here.

I believe its called the truth. You should try it sometime as it works wonders. It might be bitter at times when you swallow it but it would do you better in the long run than fantasy.

musicwriter:
If corruption is your reason it didn't work last time, then its still a reason it would not work now.

So what should we do? Continue to wallow in this quagmire and keep hoping for the best or directly targeting the problem with bold policies and necessary reforms?

One thing you forget is that great leadership is about making the right decisions no matter how tough and difficult decisions no matter how unpopular they are. Anyone can make the popular decisions but it takes a great leader to go against the grain and even his party and make the hard and truly difficult decisions despite the fact that it could cost him some votes in future or even his seat. That's what you call courageous leadership and it is something this country could use a little bit of. Anyone can keep kicking the problem down the street and hoping there successor would handle it but not everyone has the spine of steel to face it headlong and deal with the problem.

I will give you an example, when Harry Truman left office, he was widely unpopular because he had made some decisions that were not well liked but guess what? decades later, he is recognized as one of the greatest American presidents ever, right behind Abraham Lincoln, George Washington and probably higher than his boss; the great Franklin Roosevelt (whom he replaced after his died in office). That's what leadership is.

I have said it before, Nigeria cannot continue like this, something needs to change, fast.

davidif:
I believe its called the truth. You should try it sometime as it works wonders. It might be bitter at times when you swallow it but it would do you better in the long run than fantasy.

The truth? what exactly is the truth? that you think I couldnt distinguish between the IMF and world bank? *laughs* I've had reasons to swallow some really bitter truths thats how "learning" goes lots of times... so trust me "your truth" isn't bitter hence with my mouth wide open I SWALLOW YOUR TRUTH *chuckles*

Kaslyni:
The truth? what exactly is the truth? that you think I couldnt distinguish between the IMF and world bank? *laughs* I've had reasons to swallow some really bitter truths thats how "learning" goes lots of times... so trust me "your truth" isn't bitter hence with my mouth wide open I SWALLOW YOUR TRUTH *chuckles*

My comment was not about you not being able to distinguish between the world bank and the IMF it was about you saying that the IMF's forecast was based on "bad belle" as if bad belle is an economic policy in one of the world's largest financial organization. The job of economists in the imf is to analyze your countries situation, crunch the numbers and show you the picture. Whether Nigeria agrees with them and make the recommended changes is not really there problem but just like they say, numbers don't lie but men do.