The International Monetary Fund (IMF) has disclosed that the Central Bank of Nigeria must unify its exchange rate to the naira if it is to withstand external shocks to promote growth and attract foreign capital.
The fund disclosed that foreign exchange backlog and shortages are intensifying Balance of Payment (BoP) pressures insisting that exchange rate unification was imperative to reduce BoP risks.
IMF said the fiscal deficit will stay elevated in the medium term, while additional domestic revenue mobilization is required to reduce fiscal risks.
The IMF said the Nigerian economy is struggling with multiple shocks, and is expected to grow by -4.3 per cent in 2020 before a modest recovery in 2021(1.7 per cent).
The Fund further stated that fiscal transparency measures to be introduced to facilitate tracking. It also advised that the dependence on the Central Bank of Nigeria’s overdraft for fiscal funding should be annulled, adding that conflicting objectives have undermined monetary policy effectiveness.
The Fund advised that policy strategy should be strengthened to establish price stability.
Recall that the naira exchanged at N500/$1 at the parallel market. The greenback got to a long-time low after weakening by N4 from N496 to the dollar it closed on Friday.