Expdonaloaded News; FX pressure: Nigeria’s economy a volcano waiting to erupt –CBN

The Central Bank of Nigeria (CBN) has described the nation’s economy as a volcano waiting to erupt owing to the continuous pressure from the foreign exchange. The Director, Monetary Policy Department of the CBN, Moses Tule, disclosed this at a seminar organised by the apex bank for Finance Correspondents and Business Editors yesterday at Calabar, Cross River State.

Tule, while delivering a lecture entitled, “Crude Oil Volatility: Implication for External Reserves and Exchange Rate Management in Nigeria,” said the foreign exchange trend, if left unchecked, spells doom for the country’s economy.
“A rapid fall in oil prices threatens Nigeria’s macroeconomic stability because foreign exchange earnings, government revenue and domestic money supply are largely dependent on the receipts accrued from crude oil exports,” he said. He lamented that the economy is dwindling, even when Nigerians are overly concerned with the monetary policy, which tweak the interest and exchange rates while ignoring the fiscal policy.
According to him, the economy cannot grow without balancing both monetary and fiscal policies. The tax system can be used to raise the required fund to boost the budget, which the government has ignored, preferring to focus on crude oil.
Tule lamented that over the years Nigerians have shown no concern over what happens to the implementation of budget items, which he said had remained a major source of distortion to the economy. An economist and Chief Executive Officer of Financial Derivatives Company (FDC), Mr. Bismark Rewane, has added his voice to the call for fuel subsidy removal as panacea for attaining desired economic growth. He contented that with subsidy retention constituting 15 per cent of Nigeria’s import bills, the current policy modification by economy planners may not yield the desired result.
Rewane warned that, “if fuel subsidy is not dealt with, policy modification will not yield desired result. Fuel subsidy constitutes 15 per cent of Nigeria’s import bills. Remove subsidy, aberrational demand pressure disappears.”