A Nigerian – based independent think tank and research organization,Pol Eco Analytics has condemned the Central Bank of Nigeria (CBN) for the reckless management of the nation’s foreign reserves, that is very strategic to the nation economic well being.
Pol Eco Analytics having observed the recently development withing the nations foreign exchange market, essentially as the forex unification and CBN I&E Window policy have proved not to be achieving the goal of eliminating multiple forex market and mitigate currency speculation, round tripping and insider abuses that put undue pressure on the naira.
Pol Eco Analytics said; “And couple with the recent JP Morgan report they we have carefully interrogate, that suggests their is a great danger with the current status of the nation’s foreign reserves, which JP Morgan put at $3.7billion as against quoted CBN figure of $37.08 billion.
“Although the apex bank have faulty the JP Morgan report as not been correct, as it lack the understanding of the workings of the nation’s foreign reserves management.
“However, the import of the report is not ambiguous but a reminder of where we are coming from, since 1999 when the nation’s enjoyed boastful and steady increased of about $60billion US Dollars standing in 2008.
“Sadly things turns south ward for the nation’s foreign reserves when successive government between 2009 and 2012 deflected it to $43.43billion, and again things became worse from 2012 to 2014 as it went down to $41.96 billion, and between 2015 to 2018 it drop drastically to $35billion, and a deeper drop to $29billion occurred in 2020, but received a boost just after the post COVID-19 period to rise to $35billion in 2021, and gradual increased to $38billion but dropped sharply to $15billion in 2022.
“That made many analyst and commentators on Nigerian economy to raised concerns about it and was also widely reported by a section of the media across the country.
“Even at that the managers of the apex bank at the time and government dismissed the alert meant as a none issues to the state of the economy”.
Pol Eco Analytics acknowledged that, the CBN Act of 2007 specifically mandated the monetary authority to maintain the external reserve, primarily as a formal back up for the domestic currency and safeguard the value of the naira; to provide a fall back in case of fall in revenue, to provide buffer against external shock or unforeseen emergencies and natural disasters; and timely meeting up of international payment obligations such as to finance international trade which give rise to demand for liquid reserve that can readily be used to settled trade obligations, amongst others.
Pol Eco Analytic said there was no need to remind the CBN that the same CBN Act 2007 eulogized the importance of external reserves to an economy as measure to demonstrate the strength of economy, and we expect the monetary authority to be mindful of the consequence of a decreased foreign reserves negative impact and foreign exchange rate risk on the economy.
“Pol Eco Analytics as a stakeholder in the Nigerian economy and development project, believes that the CBN must explored avenue rectifies this situation by taking appropriate measures to reduce external and internal vulnerabilities debt imbalances that could make worse the status of our reserve as pointed out by JP Morgan and others. Because magnitude of such imbalance debt short term or long term could erode investors confidence in our economy, and at the same defeat the CBN intervention in the foreign exchange market to affect the currency exchange rate and for other purpose best for the economy.
“In this regards, as a matter of national priority, we call on President Tinubu and the CBN to build the external reserve on prudential macroeconomic management, that would create buffers against shock as well as invest on critical sector of the economy that would strategically lead to export oriented economy”the organization stated.
Pol Eco Analytics emphasized the need for the reserved bank of the nation to see reasons to retool its monetary policy as a measure to improve fiscal and trade policy, that would give opportunity for sound credit not to hinder growth through credit
