Financial experts praise FG's $50.45 billion external reserves, but caution on exchange rate and foreign loans.
Financial experts have praised the Federal Government's recent increase in external reserves to $50.45 billion, a 13-year high. However, they have also raised concerns about the potential impact on the country's exchange rate and the government's reliance on foreign loans.
The Governor of the Central Bank of Nigeria, Olayemi Cardoso, announced the increase at the end of the 304th Monetary Policy Committee meeting in Abuja. He stated that the current reserve level is sufficient to cover approximately 9.68 months of imports, indicating improved external buffers.
While commending the government's achievement, experts like Sheriffdeen Tella from the Department of Economics at Babcock University in Ogun State, noted that the exchange rate should have improved more significantly. Tella explained that a large reserve amount typically determines the value of the exchange rate, suggesting that the current rate may not fully reflect the country's financial strength.
Tella also urged the government to reduce the volume of foreign loans, considering the substantial reserves already accrued. He advocated for initiatives that boost the country's capital accumulation to support productive sectors, arguing that this approach would accelerate economic growth and development rather than increasing reserves and reliance on international loans.
Nerus Ekezie, a former executive director of the National Association of Small and Medium Enterprises, echoed similar sentiments. He praised the government's reserve increase but emphasized the need for tangible benefits for the populace. Ekezie described robust reserves and the removal of petroleum subsidies as essential economic fundamentals to address the country's challenges.
Moses Igbrude, the National Coordinator of the Independent Shareholders Association of Nigeria, acknowledged the reserve increase as a positive step, likely to boost investor confidence in the economy. However, he also stressed the importance of translating these reserves into improved living standards for all citizens, regardless of their socioeconomic status.
Despite the positive reception, experts caution that the reserves' true value lies in their practical application, not just their numerical value. The government is urged to address the exchange rate and foreign loan concerns to ensure the reserves' benefits are felt across the population.
