Economist Intelligence Unit, a global research firm, says President Bola Ahmed Tinubu’s administration should consider foreign borrowing to rescue the Naira against the USD in the foreign exchange market.
EIU made this known in its latest Country Report on Nigeria, which was released over the weekend.
The report noted that the Central Bank of Nigeria lacks the liquidity required to support Naira and end the continued forex crisis.
It added that the Naira will remain volatile for most of 2024.
“We believe it will take foreign borrowing to rebuild the CBN’s buffers, fully clear a backlog of unmet foreign exchange orders and restore confidence. This is probably only achievable towards the end of 2024.
“The CBN lacks the liquidity to support the Naira itself; out of $33bn in foreign reserves, a large share (estimated at nearly $20bn) is committed to various derivative deals.
“The CBN recently imposed restrictions on oil companies repatriating export earnings abroad, and there is a risk of wider convertibility limits being imposed until the currency stabilises.
“For most of this year, the naira will be highly volatile, leading to regulatory erraticism that can affect businesses, especially those holding foreign currency”, it stated.
DAILY POST recalls that in a move to clear the forex backlog, the Nigerian government took out a $3.3 billion loan from the African Export-Import Bank in mid-January, in a so-called crude oil prepayment facility.
This follows a $1 billion loan from the African Development Bank in November, and another $1.5 billion is being sought from the World Bank.
CBN governor, Olayemi Cardoso, at the beginning of this month, said the apex bank had cleared all foreign exchange backlogs except for five commercial banks.
Meanwhile, Naira fluctuations at the FX market continued on Friday as the currency traded for N1,627.40 per USD at the FMDQ.
