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Tinubu, Atiku at war over FG’s forex policy
In a heated exchange, President Tinubu and former Vice President, Atiku Abubakar, engaged in a war of words over the implementation of the federal government’s economic policies, particularly focusing on forex.
Atiku criticised President Bola Tinubu’s unification of the exchange rate, labeling it as hastily executed without proper consultations.
Atiku had said in a statement yesterday: “At a meeting called at his instance on Thursday to address the foreign exchange crisis and the problem of economic downturn, among others, Bola Tinubu failed, yet again, to showcase any concrete policy steps that his administration is taking to contain the crises of currency fluctuation and poverty that face the country.
“Rather, he told the country and experts who have been offering ideas on how to resolve the crisis that he and his team should not be distracted and allowed time to continue cooking their cocktail that has brought untold hardship to the people of Nigeria.
“The wrong policies of the Tinubu administration continue to cause untold pain and distress on the economy and the rest of us cannot keep quiet when the government has demonstrated sufficient poverty of ideas to redeem the situation.
“If the government will not hold on to their usual hubris, there are ways that the country can walk out of the current crisis.
“After a careful assessment of the state of our economy at the twilights of the last administration, I knew full well that the economy of the country was heading for the ditch and came up with a number of policy prescriptions that would rescue the country from getting into the mess that we are currently in.”
Atiku recalled that in his 2023 presidential election policy document, “My Covenant With Nigerians,” he pledged to reform the foreign exchange market by eliminating multiple exchange rate windows, which only benefited opportunists, middlemen, and fraudsters.
He added: “A fixed exchange rate system would be out of the question. First, it would not be in line with our philosophy of running an open, private sector-friendly economy.”
Secondly, operating a successful fixed-exchange rate system would require sufficient FX reserves to defend the domestic currency at all times. But as is well known, Nigeria’s major challenge is the persistent FX illiquidity occasioned by limited foreign exchange inflows to the country ”
Without sufficient FX reserves, confidence in the Nigerian economy will remain low, and naira will remain under pressure.
The economy will have no firepower to support its currency. Besides, a fixed exchange rate system is akin to running a subsidy regime! “On the other hand, given Nigeria’s underlying economic conditions, adopting a floating exchange rate system would be an overkill. We would have encouraged the Central Bank of Nigeria to adopt a gradualist approach to FX management.”
A managed-floating system would have been a preferred option. In simple terms, in such a system, the naira may fluctuate daily, but the CBN will step in to control and stabilise its value. Such control will be exercised judiciously and responsibly, especially to curb speculative activities.”
He clarified that the regulation was essential because “Nigeria has insufficient, unstable, and precarious foreign reserves to support a free-floating rate regime. Nigeria’s reserves did not have enough foreign exchange that can be sold freely at fair market prices during crises.”
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Nigeria is not earning enough US$ from its sales of crude oil because its production of oil has been declining. And, Nigeria is not attracting foreign investment in appreciable quantities.”
Presidency hits at Atiku again, accuses ex-VP of spewing lies on exchange policyBut reacting to Atiku’s statement last night, the Presidency in a statement titled, “Once again, former Vice President Atiku Abubakar got it wrong, signed by Bayo Onanuga, said: “Former Vice President, Atiku Abubakar, in an attempt to rubbish the foreign exchange policy of the Tinubu administration got his facts muddled up again.”
He also failed to prescribe a better policy option to what Governor Olayemi Cardoso and his team are executing at the apex bank.“First of all, it was not true that President Tinubu’s meeting last Thursday with the 36 gtate governors was centred on discussing foreign exchange crisis and currency fluctuation.
“What was discussed in the main was food supply and how to drastically reduce the food prices. The Minister of Information, Alhaji Mohammed Idris, gave a briefing about the meeting, revealing the highlights to State House Correspondents.
“One was that the meeting established a nexus between the state of security and the rising cost of food. Another was that hoarders are warehousing food, creating artificial scarcity and thus enabling the high cost of food items.”
According to the statement, the decisions at the meeting reflected the main points discussed: Forest rangers are to be strengthened and armed, while police are to recruit more men and the National Economic Council to deepen discussions about creating state police.
It further stated that President Tinubu affirmed his approval for the release of 42,000 Metric tonnes of grains from the national reserve.
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