Godwin Emefiele, the Governor of the Central Bank of Nigeria, has said that despite calls and recommendations by the International Monetary Fund, the World Bank and other global financial institutions, Nigeria cannot afford to operate a floated exchange rate system.
Emefiele made this known at the IMF/World Bank Spring Meetings in Washington DC, United States.
He spoke in reaction to a charge by the President of the World Bank Group, David Malpass, for Nigeria to jettison its multiple exchange rate systems and maintain a single exchange rate policy.
Emefiele said that different countries were facing diverse economic challenges and must develop a framework peculiar to their economic situation.
He said, “Both the IMF and World Bank are our prime development banks, and we have received support from them at different times in resolving some of our economic challenges, particularly bordering on finance.”
“Nigeria’s situation is very peculiar and that is why we have continued to engage the IMF and World Bank to show understanding of our local problems.
“Yes, they want us to freely float the exchange rate and you do know that this will have some impact on the exchange rate itself in the sense that when you allow that to happen, you will have some uncontrollable spiral in the country’s exchange rate.”
The CBN governor further explained that high demand for forex on certain goods which gulped up a significant fraction of Nigeria’s foreign exchange informed the Federal Government’s decision to suspend forex access for the importation of rice, wheat and other consumables.
Emefiele said the CBN had been working assiduously to ensure that measures were taken to control the exchange rate.
According to him, as long as the demand for forex exceeds the supply, the crisis of having access to forex will not go away.
“We are doing everything possible to restructure the base of the economy through some of the policies that we have put in place to deepen the production of goods in Nigeria,” he added.