Recent policies on the exchange rates by the Central Bank of Nigeria have been trending on the news. Also, the International Monetary Fund (IMF) has appealed to the CBN to remove its stringent policies and allow the exchange rate to determine the real cost of the naira.
Last month the apex bank said there was no going back when it released its Monetary Policy Communique revealing that it was sticking with 11% for Monetary Policy Rates (rates at which it lends money to banks), Cash reserve requirement (CRR) at 20% (amount of deposits banks cannot lend out) and liquidity ratio of 30%, foreign exchange restriction on 41 items, and pegged the currency at N197-N199 per dollar amid the drop in oil prices.
The IMF also suggested that the cost of doing business in the country should be decreased by enhancing accountability and transparency so that foreign and local investors will thrive and the economy will start booming.
According to the Global financial institution,the country needs to work on the fundamental problems such as corruption, insecurity and the petroleum bill reforms if it will make any head way.
“Eliminating existing macroeconomic imbalances and achieving sustained private sector-led growth requires a renewed focus on ensuring the competitiveness of the economy. As part of a credible package of policies, the exchange rate should be allowed to reflect market forces more and restrictions on access to foreign exchange removed, while improving the functioning of the interbank foreign exchange market (IFEM).
“It will be important for the regulatory and supervisory frameworks to ensure a strong and resilient financial sector that can support private sector investment across production segments (including SMEs) at reasonable financing costs. Staff is supportive of the authorities’ ongoing efforts to promote targeted and core infrastructure (in power, integrated transport network, housing); reduce business environment costs through greater transparency and accountability, promote employment of youth and female populations,” the IMF said.
This article was culled in parts from Punch