FG Seeks to Boost Forex Supply and Cushion Subsidy Removal Impact

The Federal Government has unveiled its strategy to address the current scarcity of foreign exchange and shore up the value of the naira, the Finance and Coordinating Minister of the Economy, Wale Edun, announced yesterday at his maiden press conference in Abuja.

He said the government would work with the Central Bank of Nigeria (CBN) to attract more foreign exchange into the country from various sources, including Nigerians abroad and those with domiciliary accounts.

He made the announcement on the same day that Anambra State governor and former CBN governor, Charles Soludo, described the economy inherited by President Bola Tinubu as a “dead horse standing”. Soludo warned that dealing with the economy would be tough and that the “coming months will be bumpy”.

Edun explained that there were substantial sources of foreign exchange available to Nigeria that could be tapped to increase the money supply of dollars and boost the reserves.

He said the government was considering giving incentives to Nigerians with funds in domiciliary accounts to invest them in Nigeria rather than in foreign economies. He also said the government would encourage Nigerians living and working abroad to save in Nigeria by improving payment mechanisms.

Edun added that the government also expected more foreign exchange from the recovery of oil production, which would provide additional liquidity and naira resources to the government. He expressed optimism that the government would put in place the kind of structures and incentive framework that would bring Nigerian money abroad and outside the system into the financial and economic system to create jobs for Nigerians.

The finance minister also spoke on the Federal Government’s efforts to cushion the effects of the fuel subsidy removal, which took effect in May 2023 and led to a sharp increase in the price of petrol and other commodities.

He said only N2 billion of the N5 billion that the federal authorities offered to each of the 36 states and the Federal Capital Territory (FCT) as palliative had so far been released to them. He said releasing the entire sum at once would be self-defeating as it could lead to an inflationary spiral and exchange rate instability.

He said the delay in rolling out the palliatives was because it took so long for the decision to remove the subsidy to be taken. He said it would not take much longer than necessary for the benefits to filter through. He said the poor and vulnerable in particular needed to be helped through the process but rather than being hasty it was just in time.

He said President Tinubu, who took the decision to remove the subsidy, had the responsibility to help people through it. He also said Tinubu was a democrat who believed in federalism, fiscal federalism and equity. He said the states and local governments had a role to play as well because their finances would now grow as a result of increased oil revenue.

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