The Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, has distanced her office from the devaluation of the naira from N155 to N168 to the US dollar. The Monetary Policy Committee had on Tuesday devalued the naira, citing constraints in the ability of the bank to continually defend the naira and sustain the stability of the exchange rate occasioned by the falling oil price.
The minister, while fending off criticisms of the government’s action by some angry Nigerians, stated that she did not give any marching orders to the CBN to devalue the naira following the decline in the price of crude oil.
Writing on Twitter, Okonjo-Iweala, through her Special Adviser on Media, Paul Nwabuikwu, argued that although the roles and responsibilities of the CBN and the Federal Ministry of Finance were complementary, the apex financial regulatory institution took the decision on the naira devaluation independently.
“Why don’t you (critics) read up on the autonomy of central banks and global best practices? It (naira devaluation) was not a political or ideological issue.
“Don’t misquote me: I said the Central Bank of Nigeria and the Federal Ministry of Finance have complementary roles but the CBN is independent. But of course there is coordination.
“Since monetary and fiscal policies are complementary, the best practice is to keep them separate in the interest of the economy. As I have said, devaluation is part of the monetary policy which is CBN’s duty. The institution is independent,” Okonjo-Iweala stated.
She added that the Federal Government had the wherewithal to “manage its way through” the expected impact of the decline in the price of crude oil on the Nigerian economy.
According to her, some of the initiatives aimed at cushioning the effect of the development on the economy and, by extension, Nigerians, were the austerity measures unveiled by the Federal Government recently.
“Nigeria has what it takes to manage its way through. Benchmark for budget 2015 has been lowered to more realistic $73 per barrel. Besides, we are pushing for more non-oil revenues and there would be surcharge on luxury items.
“We are protecting investments important to ordinary Nigerians,” the minister added in a message posted on her personal Twitter page.
But a former Vice-President of the World Bank, Dr. Oby Ezekwesili, described as unfortunate the Federal Government’s belated response to oil price fall, naira devaluation and austerity measures it introduced.
Ezekwesili stated that despite raising the alarm on the management of the country’s foreign reserve during her 2013 convocation lecture of the University of Nigeria, Nsukka the Federal Government failed to address the issues raised.
The ex-World Bank VP had during the lecture said that the late President Umaru Yar’Adua and the President Goodluck Jonathan administrations squandered the foreign reserve of $67bn left by the Olusegun Obasanjo-led Federal government.
She argued that despite the fact that oil was sold above $100 for years the government appeared to be struggling to meet up with its obligation within a month of oil drop to $80.
“The public debate that is unfortunately and painfully happening now on the economy is what I hoped for as a healthy response to my UNN speech in 2013,” she added on Twitter.
Describing the current state of the Nigerian economy as parlous, she counselled Nigerians not to despair, adding that those still apprehensive of the negative effect of the naira devaluation on their personal finance should avail themselves of academic blogs that would break down the economic implications to them.
A social commentator, Ali George, lamented that the recent devaluation of the naira was a penalty that the common man has to pay for the failure of Nigerian leaders who had no vision and failed to save for a rainy day.
Stating that Nigeria had over the years failed to diversify its revenue base, he stated that it was unfortunate that after 54 years of independence “the only thing we export is crude oil.”
“I don’t need to go to Harvard to know that the main reason for devaluation of the naira is to avoid a budget deficit. Sadly, the budget we are trying to fund by devaluing our naira is over 75 per cent recurrent, meaning we devalued just to fund consumption.
“Devaluation of the naira will make exports more competitive and appear cheaper to foreigners but Nigeria does not produce: we are a consuming nation. Devaluation of the naira means imports will become more expensive and hence Nigerians should prepare for inflation,” George argued.
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