Nigeria Needs Boost In Oil Production – Edun

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has stressed the need to boost oil production in the country to address the foreign exchange issues in the country, even as he stressed the need for countries implementing reforms to focus on protecting the vulnerable.

Edun, speaking during a media briefing of the Intergovernmental Group of 24 (G24), on International Monetary Affairs and Development, which is a group of countries that includes members of the World Bank and IMF, as well as other developing countries, stressed the need to ramp up oil production.
Responding to concerns that the Federation Account Allocation Committee (FAAC) disbursement results in significant pressures in the forex market, Edun said the key about the foreign exchange market really is supply and as you know we are an oil-producing country, we just need to get our oil production up and that will deal with that issue of foreign exchange supply and pressure on foreign exchange anytime there are large flows.”

Commenting on the reforms undertaken by Nigeria in the face of the global economic downturn, the Minister noted that developing countries must focus on implementing sustainable reforms at the macroeconomic level while ensuring that the most vulnerable populations are protected from the immediate costs of those reforms.

“In devising these programmes and carrying out reforms, what is particularly important is the social safety net that will help the poor and the vulnerable cope with the upfront costs with a spike in their cost of living. It has to be adequately planned for and dealt with.

Stressing the importance of planning for social safety nets to help the poor and vulnerable cope with the immediate impact of such reforms, Edun said the programmes for the vulnerable in the society should be adequately communicated to build public trust.

The minister, calling on the multilateral institutions such as the World Bank and the IMF to increase funding for Nigeria and G24 countries, said the funding should not only meet immediate needs but also pursue the long-term developmental needs of developing countries.

“We continue to ask for an improved global financial architecture that provides us with more concessional funding, particularly for those countries that, as I said earlier, are undertaking the macroeconomic reforms that everybody agrees are sensible and will lead to better lives for their people,” he said.

“I think around this time last year, we were still dealing with heightened levels of inflation, particularly in the developed countries, and that meant elevated rates of interest, as their number one priority, the fight against inflation and tight monetary policy by the central banks. “That has changed, and there is now, as we have seen monetary easing or at least easing of rates of interest by central banks, but that’s in the developed world.

“In the developing world, rates are still high, and that fight against inflation means that the interest rates also will remain high. But as far as the developed world is concerned, lower interest rates translate to more affordability. Nobody wants to borrow, nobody likes to borrow, but when it becomes necessary, it’s something that must be managed as well as possible.

“And so, the first port of call is concessional financing, either financing from the World Bank.

“The developing world continues to call for larger sums that can really make a difference, not just to be able to help a country cope with its immediate payment needs, but to have funds to grow the economies. That is what the fight against inflation translates to for the developing countries.”

He commended the recent 36 per cent reduction in the IMF’s borrowing cost, describing it as a step in the right direction to help developing countries manage their debt while accessing the resources needed for economic growth.