Central Bank of Nigeria (CBN) Governor Godwin Emefiele has warned that the Peoples Democratic Party (PDP) presidential candidate’s suggestion that the exchange rate should be free float is a recipe for disaster.
“The MPC reviewed it and concluded that it would be wrong. It is as good as saying that we should go back to the era of Structural Adjustment Programme (SAP) in Nigeria,” Emefiele said.
“The implication can better be imagined. It will certainly lead to capital flight, lead to massive depreciation or devaluation of the currency and ultimately to currency crisis in Nigeria and I think we should all know that it is a road to perdition to ever go in that direction.”
Addressing reporters at the end of the bi-monthly Monetary Policy Committee (MPC) meeting, the first for the year, Emefiele added: “There is no capital control in Nigeria today because you cannot find the CBN trying to intervene in the market for demand and supply of foreign exchange.”
“Normally, the Central Bank as an independent institution is apolitical but it is also important that at the MPC meeting today we asked ourselves if there is any merit in it to begin to say that we should look at free-floating the currency or that we should allow free import of goods that we have restricted. The MPC came to a conclusion that this was a wrong premise.
“We cannot be talking about allowing import of items that can be produced in the country today, exporting jobs from Nigeria to foreign countries, and we say we have the interest of Nigeria at heart? We don’t agree with anybody. It is a wrong premise to say that you will allow imports to just flood the country just because you want to please anybody. It is not in our interest.
“We will remain apolitical. We will not want anybody to drag the central bank into issues that are within our remit otherwise, we would respond to it.”
Alhaji Atiku Abubakar in his policy document condemns what he calls the “Poor exchange rate management”, which bred “multiple exchange rates that were exploited by opportunists, rent-seekers, middlemen, arbitrageurs, and fraudsters”. By imolication, he wants the naira to be on a free-float.