In a startling development, the Nigerian government, under President Bola Tinubu, has expended approximately $8 billion in an effort to stabilize the naira amid ongoing economic challenges.
This was disclosed by Bismarck Rewane, CEO of Financial Derivatives Company, on Friday. Speaking on Channels Television’s News at 10, Rewane emphasized the significant interventions made to manage exchange rate fluctuations and inflation concerns.
His remarks came in the wake of the recent Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN), which maintained the Monetary Policy Rate (MPR) at 27.50% on Thursday.
According to Rewane, the government has not only invested billions in defending the currency but has also secured additional funds through debt instruments. “We’ve also borrowed $4 billion in bond issues. When you look at that, you’ll see there is a lot of work. We’ve actually spent almost $8 billion trying to support the naira at current levels,” he stated.
Inflation Rebased: What Does It Mean?
Rewane also addressed the recent rebasing of Nigeria’s inflation data, which has led to differing interpretations of the country’s economic realities. He outlined three distinct methods of measuring inflation, each yielding varying figures.
Expressing doubt about the sharp decline reported in the new inflation metric, he remarked that the figures might not accurately reflect the day-to-day experiences of Nigerians. “There’s no way that inflation can reduce by 10% in such a short period. The average person does not believe that inflation has come down as sharply as that,” he said.
Implications for Nigerians
The persistent pressure on the naira, coupled with inflation uncertainties, raises concerns about the effectiveness of government policies in stabilizing the economy. While official figures suggest inflation is moderating, market realities paint a different picture, leaving consumers to grapple with rising living costs.
During the announcement of the MPC decision, CBN Governor Olayemi Cardoso stated, “At this meeting, the Monetary Policy Committee noted with satisfaction recent macroeconomic developments, which are expected to positively impact price dynamics in the near to medium term. These include stability in the foreign exchange market with the resultant appreciation of the exchange rate and moderation in the price of PMS.”
Cardoso also acknowledged, “Members, however, were not oblivious of the persistent inflationary pressures, driven largely by food prices. The Committee noted the recent rebasing of the commodity price index (CPI) by the National Bureau of Statistics (NBS), which reviewed the weights of items to reflect current consumption.”
