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Nigeria lost huge forex trying to defend naira – FG

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The Federal Government has said that the nation lost huge foreign exchange (forex) trying to defend the nation’s currency.

According to the government, it took the right step by instituting forex reforms and freeing forex previously used to defend the naira.

Minister of Finance and Coordinating Minister of the Economy, Wale Edun, who made this known while speaking at the unveiling of the 2023 Nigerian Banking Sector Report titled: “Getting Nigeria to Work Again!” in Lagos, said the implementation of the ‘willing buyer, willing seller’ model has preserved forex for the economy.

Represented by the Chief Executive Officer, Ministry of Finance Incorporated, Dr. Armstrong Takang, Edun defended ongoing reforms in the forex market.

He said that in its effort to unlock forex liquidity, the Federal Government is encouraging people with genuine forex to bring them back home for investment in the domestic economy.

He said many of the corporate assets are not paying dividend to the government, and that has led to revenue loss.

“The International Monetary Fund (IMF) advised us that domestic resource mobilization is key in our plan to boost revenue.

“Also, many of our corporate assets have not been paying dividends. We have oil and gas assets that are not performing optimally and that has to stop. We need to optimize assets lying dormant to boost capital position”.

He said that there are many companies that owe government but continues to do business with the government without settling their obligations.

“We are now debiting the account of such companies to recover the debts. Government business should be run as business where we have commercial interest”, he said.

In his own submission, Managing Director of Afrinvest West Africa Limited, Ike Chioke, advised monetary and fiscal authorities to rethink their anti-inflation strategies to holistically addressing the ugly narrative of surging inflation rate.

He explained that both the monetary and fiscal authorities have mainly been fixated on the control of money supply and selective tax reliefs.

“In our view, an effective strategy for taming the high inflation rate would be one that addresses structural bottlenecks (notably, insecurity and infrastructural gaps), improves ease of doing business, and incentivize large-scale local production of agriculture and manufactured goods alongside effective liquidity management and proper anchoring of market yields to the Monetary Policy Rate (MPR).

“In all, we stress that failure to stem the surging inflation tide in the near term would result in a contagion financial sector crisis and by extension, derail other segments of the economy from the growth path, given banks’ pivotal role as an economic bridge between the supply and demand segments of the economy”, he said.

According to the report, Nigeria’s fiscal deterioration has continued unabated. After hitting the N70 trillion in 2022 due mainly to the N23.7 trillion addition from securitized Ways and Means liabilities, the total public debt profile nudged higher to N87.4 trillion in the first half of this year.

“This, in addition to underwhelming revenue performance in first half of 2023 (actual revenue, N4.1 trillion, under performs pro-rata target by 26.5 per cent, and 99 per cent of it, N4 trillion was used to servicing debt) has further put Nigeria on the cusp of insolvency.

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“Against this backdrop, the new administration of President Bola Tinubu has introduced some policy measures to assuage the fiscal pressure, notable amongst which are the ‘partial’ removal of subsidy payment on PMS, the increase in education tax by 50 basis points to three per cent, and the introduction of a 7.5 per cent Value Added Tax on diesel”, the report said.

Despite these measures, Afrinvest said it does not see a quick fix to the fiscal pressure in the near-term, given increasing internal and external pressure points on the economy and the time lag required for policy reforms to manifest gains.

The panelists at the event-Amal Hassan, Founder/CEO, Outsource Global; Robert Dickerman, Chief Executive Officer, Pinnacle Oil and Gas; Odunayo Eweniyi, Cofounder/Chief Operations Officer, Piggyvest; Anthony Okungbowa Esq., Head of Service, Edo State Government and Sadiq Kassim, Director, Corporate Affairs, TGI Group, all called on the government to take steps that will boost government revenue earning capacity and boost food security through support for the agricultural sector.

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