Stabilize Naira’s Free Fall Urgently – PGF DG Tasks CBN

Godwin Amunde

The Director-General of the Progressive Governors Forum (PGF)- the umbrella body of Nigerian Governors elected on the platform of the ruling All Progressives Congress (APC) – Dr. Salisu Mohd Lukman,  has asked the Central Bank of Nigeria (CBN) to urgently and expeditiously stablize the Naira exchange rate to the Dollar.

The PGF DG noted that the Naira had lost over 200% of its value in the six years of the present administration, falling to N570 to a dollar in recent weeks from N158 a Dollar left by the Goodluck Jonathan administration.

In a statement titled ‘Nigeria’s debt and struggle for new Nigeria released to newsmen Wednesday in Abuja, Dr. Lukman said the uncontrolled depreciation of the Nigerian currency especially in the last two years is highly unacceptable and blamed it partly for the surging Naira component of the nation’s debt profile.

He said the elementary logic is that higher budget deficits contribute to pushing governments to borrow, and tasked relevant appointees of President Mohammadu Buhari administration to launch intellectually sound arguments and debates to counter the widespread accusation of reckless borrowings levied against the APC administration by the Peoples Democratic Party (PDP). 

Debt Profile: PGF DG Tasks CBN On Naira's Free Fall – Independent Newspaper  Nigeria
Dr. Lukman

The statement reads in part:

“The administration has been on the back foot in the debate with regards to the country’s burgeoning external debt profile against the backdrop of the recent request by President Mohammadu Buhari to the National Assembly for an additional $4,054,476,863, €710 million and grant components of $125 million.

“Applying the same logic, expectedly lower debts should encourage governments to have more favourable balanced budgets. Although following debt cancellation of more than $30 billion in 2004, under former President Obasanjo, there was reduction in budget deficit consistently, between 2003 and 2008, from -202.7, -172.6, -161.4, -100.8, -117.2 and -47.4, respectively for 2003, 2004, 2005, 2006, 2007 and 2008, however, considering lower capital to recurrent expenditure ratio, it is quite debatable whether any favorable change was achieved.

“Therefore, while appealing to the CBN to take every measure necessary urgently and expeditiously to stablize the Naira exchange rate, similar appeal must also be made to all functionaries of the federal government, especially in ministries of Finance and National Planning to provide all the intellectual leadership required to convert the false accusation that APC led government of Buhari is recklessly borrowing. 

“Nigeria’s borrowing, both with reference to debt/GDP and debt/revenue ratio is still below the permissible economic threshold of below 60% and 46% respectively. If economic indices are the reference point in any comparative assessment of performance President Buhari led administration as compared to all the PDP administrations between 1999 and 2016, PDP leaders and their supporters cannot have any voice!

“Everything considered, all the indices of Nigeria’s fiscal management between 1999 and 2020, indicates more prudence under the six years of President Buhari than during the eight years of former President Obasanjo, notwithstanding the claims of cancelling Nigerian debts.

“By the time the analysis is expanded to cover specific issues of projects executed, under the current administration of President Buhari, Nigerians would need help from former President Obasanjo, former President Goodluck, all PDP leaders and their supporters to highlight what specifically they were able to give Nigerians in terms of projects executed in return for their ‘prudent’ management of the national economy during their sixteen years tenure.

“For instance, President Buhari is implementing one of the most ambitious National Social Investment Programme (NSIP) in the country since independence. Under the programme, with the goal of lifting 100 million Nigerians out of poverty, millions of poor Nigerians are benefiting from these initiatives.

“One of the components of the programme, Government Enterprise and Empowerment Programme (GEEP), N36.9 billion in interest-free loans of between N50,000 to N350,000 has been disbursed to more than 2.3 million Nigerians. Under another component of the Programme Home-Grown School Feeding Programme, 9.9 million primary 1 – 3 pupils in 54,952 public primary schools in 35 states have benefited. 

“Additional 107,000 cooks have been engaged. In the case of Conditional Cash Transfer, the third component, more than 3 million poor and vulnerable households have been registered on the National Social Register, out of which more than one million families are currently being paid N5,000 monthly.”

He said the debate about the rising borrowing has been mostly politicized.

“So far, the debate about Nigeria’s debt is based on the absolute value of the amount Nigeria owe. Variables of both GDP and revenue are ignored in the debate. Without any doubt, some of the concerns expressed in the debate are legitimate, especially in relation to problems of exchange rate, which has further increased Nigeria’s debt burden. 

“But in terms of looking at other critical variables such as revenue profile and even performance of the economy, the debate is excessively politicization. This is partly responsible for why some even suggest that compared to all previous PDP administrations between 1999 and 2015, the performance of the APC led administration of President Buhari is reckless. How correct is this assertion? In terms of both debt/GDP and debt/revenue ratios, what is the reality?

“In the area of infrastructure, APC led administration of President Buhari has increased annual budgetary allocation for Federal Roads to about N260 billion as against the allocation of 18 billion Naira in 2015 under PDP administration.”

Lukman was of the view that had the CBN had a hold on the exchange rate of Naira, perhaps the debt profile would have been held under manageable limits.

“The other challenge, which is very disturbing is issues around the management of Nigeria’s foreign exchange by the Central Bank. A situation whereby the US Dollar would appear to be on a roller-coaster against the Naira is simply unacceptable.

“Had the Naira to US Dollar exchange rate been stable in the last two years, most of the alleged debates about so-called recklessness against the government of President Buhari would have been long settled.

“Therefore, while appealing to the CBN to take every measure necessary urgently and expeditiously to stabilize the Naira exchange rate,” he noted.

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