With borrowing not offering a lot of prospects, the government’s attention shifted more to alternative means of growing the economy including attracting foreign direct investments and expanding the tax revenue base.
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That debt level “exceeds the recommended threshold of 50 per cent due to low revenue, which means that there is a need to significantly increase government,” the debt office said in a report titled Market Access Country-Debt Sustainability Analysis 2022. It’s essential to acknowledge that news production incurs expenses, and we take pride in never placing our stories behind a prohibitive paywall.“If you have fiscal and monetary tools, the one that works faster is monetary tools,” Paul Alaje, chief economist at the economic development firm, SPM Professionals, told PREMIUM TIMES.
In November, President Tinubu inked a couple of investment deals with the Saudi Arabian government during the Saudi-Africa Summit in Riyadh. One involved providing a foreign exchange support to boost liquidity in the Nigerian currency market. Another was a commitment that would allow Saudi oil giant, Aramco, to provide part of the capital for the overhaul of Nigeria’s four state-owned oil refineries.
Mr Cardoso has said the CBN under his watch would turn its gaze towards fighting inflation rather than money control, which was a massive distraction for his predecessor, considering that consumer price levels must be kept stable to achieve steady economic growth. “The balance of risks suggests further tightening of policy to build on the benefits from previous hikes,” Mr Cardoso said on 21 May at the end of a monetary policy meeting in Abuja, hinting that the pace of increase in price levels is not as high as it was.
Harmonising the foreign exchange rates was key to drawing foreign investors into the economy and boosting the supply of the dollar whose flow had started running dry since pre-pandemic days. The local unit ended 2023 at 1,041 to a dollar, making it the world’s third worst-performing currency, only better than the Lebanese pound and Argentina’s peso of the 151 currencies tracked by Bloomberg for the year.
One big feat by the CBN in the first quarter of the year was clearing a backlog of overdue foreign exchange obligations initially estimated at $7 billion before an audit found that $2.4 billion of that amount were invalid claims. The overhang, the central bank said, had left the naira vulnerable to exchange rate pressures for quite a long time.
“The central bank is not supposed to appoint someone to sell dollar to them in the case of BDCs. It’s an aberration in a free-float economy,” Mr Alaje said. Between the beginning of the administration and 22 May, Nigerian stocks had yielded 85.2 per cent according to Nigerian Exchange Limited data.
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