Soludo optimistic recession’ll soon be over, wants multiple exchange rates scrapped

Former Governor of the Central Bank of Nigeria (CBN) Prof. Chukwuma Soludo is certain that Nigeria will soon get out of economic recession regardless of the Federal Government’s policies.

He however argued that the Federal Government must jettison multiple exchange rates, eliminate the premium and get it back on track at a competitive exchange rate regime.

Soludo who chaired an Economic Discourse organised by the Institute of Chartered Accountants of Nigeria, stated this when he spoke while fielding questions from journalists shortly after the event in Lagos.

According to the erstwhile CBN governor, policymakers have to do the needful and take bold steps that would take the country away from crude oil dependency to a non-oil economy on the long run.

He commended the restructure in foreign exchange market by the CBN in recent weeks, but insisted some measures and steps are still needed to be taken to fasten the country’s economic recovery.

“With regards to exchange rate, I can see quite some changes in the last few weeks. I think some steps are beginning to be taken, but it is still quite a long way to go to get to a stable and predictable level that eliminates the premium among the multiplicity of exchange rates.

“Nigeria must get out of multiple exchange rates and we must eliminate the premium, get it back on track at a competitive exchange rate regime. The uncertainty that is created by that is so enormous; and with the oil price rising and with the increase in oil earnings, this is the time to take bold steps and do the needful,” he said.

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On how to eliminate the multiple exchange rates and close the gap, he explained, “On bold steps, the template is not too far. We have done it before and it is just going back to it. If it (the template) is not broken, why mend it? Get back and eliminate the multiple exchange rate regime, eliminate the premium, or at least significantly reduce it to not more than between three to maximum of five per cent premium between the parallel and official exchange rates.

“On what it takes to do it, that is basically known. Get the public finance okay; I can tell you that with the momentum of what is going on in the rest of the world, by the end of this year, we should actually be having stocks of reserves in the range of about $50bn or $60bn.”

He further said, “We have to get Nigeria structured and reengineered towards non-oil economy, which again will require a lot more serious work. The recession is not the issue. We will get out of it in spite of government policy.

“I think this is a time Nigeria should actually be making hard decisions to transit away from an oil revenue economy. And that’s the serious work.”

Analysts claim that the currency currently has about five exchange rates.

 

 

 

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