The Central Bank of Nigeria (CBN) has again rejected calls by the International Monetary Fund (IMF) and the World Bank that Nigeria should free-float its currency.
This decision by the CBN is backed by some eminent Nigerian economists who are against the single exchange rate policy because of the potential harm it can do to an already faltering economy.
The World Bank and IMF have, for years, mounted pressure on the CBN to maintain a single exchange rate policy.
However, CBN Governor, Godwin Emefiele, has often responded by insisting that Nigeria cannot afford to operate a floated exchange rate system.
He said, “Both the IMF and World Bank are our prime development banks, and we have received support from them at different times in resolving some of our economic challenges, particularly bordering on finance.”
“Nigeria’s situation is very peculiar and that is why we have continued to engage the IMF and World Bank to show understanding of our local problems. Yes, they want us to freely float the exchange rate and you do know that this will have some impact on the exchange rate itself in the sense that when you allow that to happen, you will have some uncontrollable spiral in the country’s exchange rate.”
Lead Consultant, Industry and Private Sector Development of the ECOWAS Commission, Prof Ken Ife, said, “the IMF and World Bank are not monetary and financial advisers to the Federal Government of Nigeria. Their mandate is to restate the obvious international best practices.”
