$1.8bn Flows Into Forex Market After Reforms – Federal Govt

The federal government has said that $1.8 billion flowed into the forex market last week on the back of its new reforms.

It also announced significant positive outcomes from recent economic reforms, including the removal of the petrol subsidy and the move towards a unified exchange rate, under the leadership of President Bola Ahmed Tinubu.

In a statement made available to newsmen yesterday in Abuja, the Minister of Information and National Orientation, Muhammed Idris, reiterated that since the removal of the petrol subsidy, petrol importation has decreased by 50 per cent, amounting to one billion litres monthly.

“It is heartwarming to note that we are starting to see the results. Indeed, the naira is stabilising, and the foreign exchange market is seeing a surge of inflows. The latest NBS figures show that capital importation into Nigeria rose by over 66 per cent in Q4 2023, compared with the preceding quarter. The CBN Governor has also highlighted the fact that $1.8 billion flowed into the forex market last week, on the back of the new reforms,” he said.

Idris pointed out that crude oil production has steadily increased, reaching an average of 1.55 million barrels per day in Q4 2023, up from 1.22 million barrels per day in the preceding quarter.

“Additionally, monthly receipts by States from the Federal Accounts Allocation Committee (FAAC) have surged since the subsidy removal, providing governments at all levels with billions of Naira in extra headroom to deliver the dividends of democracy to Nigerians.

“Tinubu’s second most far-reaching pronouncement was his promise that the Central Bank of Nigeria (CBN) would work towards a unified exchange rate.

“In line with his vision for a more transparent and equitable monetary policy, without abandoning its operational independence, the CBN took the bold step of loosening control of foreign exchange rates, allowing access to foreign exchange at market rates determined on the principle of ‘willing seller, willing buyer,” he said.

He acknowledged that these policy moves are not silver bullets and that more is required, understanding that these are foundational fiscal and monetary policy moves upon which they must build the superstructure of true economic growth and prosperity.

Idris stated that respected economists and experts acknowledge that these foundational reforms will be difficult and painful for Nigerians in the short term but are deemed inevitable for robust and lasting economic growth.

“The problems we are solving are multifaceted, intertwined, and deep-rooted, requiring creative, strategic, decisive, and multi-pronged solutions. These bold moves align with what is required,” he said.

He highlighted that the CBN has been proactive, initiating a comprehensive strategy to enhance liquidity in the forex market.

“In addition to unifying the rates, the bank has also cleared a significant amount of outstanding Forex obligations and outlined new operational mechanisms for commercial banks, Bureau De Change (BDC) operators, and International Money Transfer Operators (IMTOs),” he said.

He emphasised that they are starting to see results, with the naira stabilising, and the foreign exchange market experiencing a surge of inflows.

He said the latest NBS figures show that capital importation into Nigeria rose by over 66 per cent in Q4 2023 compared to the preceding quarter.

“Unfortunately, efforts to reform and sanitise a system entrenched in long-term malpractice have been met with ferocious resistance from speculators and other unscrupulous players, profiting from dysfunction and opacity,” he said.

He said to tackle this, regulatory and enforcement agencies of the government have been working round the clock in the past few days, joining forces to address efforts undermining the reforms.

He noted that a strategic alliance has led to the intelligence-led identification, investigation, and sanctioning of individuals and organisations involved in illegal activities and sabotage within the forex market.

He said relevant regulatory and security agencies have been directed to remain vigilant to ensure that malpractices undermining the currency are averted, and those engaged in these acts are brought to book.

Idris assured that the government will not allow its efforts to be jeopardised; the emerging stability of the naira is in the interest of all Nigerians.

He said Nigerians should rest assured that the government will continue to take further steps to stabilise the naira and safeguard the economy.