Supporters of devaluation may have lost the battle following the Federal Government’s resolve to retain the naira value against the dollar.
The naira currently exchanges for N197 to the dollar at the official market.
Vice President Yemi Osinbajo said yesterday that devaluation is not the appropriate option under the prevailing economic realities.
Many experts, including former Central Bank of Nigeria (CBN) governor and Emir of Kano Muhammad Sanusi II have been advocating devaluation of the currency.
According to Sanusi, the “current value of the naira is unsustainable”.
But Osinbajo, while receiving some envoys and officials of Citybank led by Mr. Jim Cowles, in Abuja, said: “Devaluation is no solution as far as the Buhari administration is concerned”.
Osinbajo, who also received Italian Ambassador to Nigeria, Mr. Fulvio Rustico and the Canadian High Commisioner in Nigeria Mr. Perry John Calderwood, said: “It is not a solution, we are not exporting significantly. And the way things are, devaluation will not help the local economy.”
He added: “What we need to do is to start spending more on the economy and then things will ease up a bit.”
The issues around the economy, Osinbajo said, were no exact sciences, stressing that what is important is to be reasonably flexible in dealing with them.
He outlined the government’s plans to set-up a $25 billion Infrastructural Fund to be sourced from local and international sources including through Nigeria’s Sovereign Wealth Fund and the pension fund, among others.The Vice President said other sovereign wealth funds have indicated interest in the fund which would be used to address the nation’s decaying road, rail and power infrastructure. “This is our approach to speeding up the country’s infrastructural development.”
Osinbajo described as temporary measure the current foreign exchange restriction, adding that it is to ensure that “we don’t deplete our foreign exchange substantially,” at a time when oil prices are falling in the international market.
The restriction is also to bring some stability to the foreign reserves without which Foreign Direct Investment (FDI), might be affected.
To him, FDI is more forward looking than portfolio investments, which are being affected by the decision to manage the foreign exchange resources of the country at this time.
“I am not sure devaluation is the issue, but how to ensure foreign direct investment which is more useful, “ the vice president said, adding that he expects a bit more stability and direction in the next few months.
He said the government would work with the CBN to ensure that legitimate businesses are not badly impacted by the current foreign exchange restrictions, especially those who have previous contracts and loan commitments.
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