Posted by From Ayodele Aminu and Constance Ikokwu in Washington DC on
Nigeria is on the verge of assenting to Article VIII of the International Monetary Fund (IMF) charter to have current account convertibility, Central Bank of Nigeria (CBN) Governor, Prof. Chukwuma Soludo, has said.
• 2009 Budget keeps minister away from IMF meeting
Nigeria is on the verge of assenting to Article VIII of the International Monetary Fund (IMF) charter to have current account convertibility, Central Bank of Nigeria (CBN) Governor, Prof. Chukwuma Soludo, has said.
It has also emerged that the pressure arising from the need to get next year's budget ready for submission to the National Assembly kept away Finance Minister, Dr. Shamsuddeen Usman, and his Minister of State, Mr. Aderemi Babalola, from the ongoing annual World Bank/IMF meetings in Washington DC.
Currency convertibility is the ease with which the naira can be traded for foreign currency for a particular usage and at a given exchange rate. It permits free inflows and outflows for all uses other than for capital purposes.
Nigerians will soon be able to make and receive trade-related payments in dollars (or any other foreign currency) for export of goods and services and pay dollars for import of goods and services, make sundry remittances, access foreign currency for travel, studies abroad, medical treatment and gifts.
Briefing journalists yesterday in Washington, Soludo said the current account convertibility idea is being embraced by Nigeria because the global system prescribes it as a standard.
Currency convertibility is one of the four items on the agenda for the naira launched last year by the CBN but which the redenomination of the national currency was put on hold.
With the system, Nigerians in the Diaspora, like in developed economies, would be able to remit their funds home in whatever foreign currencies they desire without any constraint.
Soludo explained: 'One of the key requirements is that you are not going to have multiple currency practice.'
He recalled that on July 28, President Umaru Musa Yar'Adua had approved that Nigeria assent to Article VIII of the IMF, which prescribes current account convertibility.
Soludo said Nigeria is one of the 18 countries in the world yet to operate the system, but said the country was already working out the modalities.
He noted that global micro-economic imbalance still remains with most of the world running into deficits, while several others such as China are running surpluses.
'The global economy is plunging into a recession, which might drag to 2009. If that happens, the implications for the developing world are quite clear.
'As for Nigeria, the context that pertains to us mainly is the issue of commodity prices, which would fall. Oil prices are already dropping and probably will continue and that has serious implication for our microeconomic especially on the fiscal side of things,' he said, adding: 'With the stress on the global economy, there is likely to be higher lending rates, which would affect the entire world.'
THISDAY gathered that Shamsuddeen and Babalola had to stay back in Abuja so as to keep up with Yar' Adua's deadline that the budget proposal should be ready on Wednesday, October 15.
With the absence of the duo, Nigeria is not being represented at the ministerial level at the meetings, which would end also on Wednesday.
Soludo is the most senior Nigerian official at the yearly forum where managers of national economies meet to deliberate on different issues affecting the global economy.
Soludo is being assisted by one of his deputies, Dr. Sarah Alade, who is in charge of Economic Policy at the CBN; the Accountant General of the Federation, Alhaji Ibrahim Dankwabo, and Director, National Planning Commission (NPC), Mr. Sylvester Monye.
Soludo, and other members of the delegation have however, been carrying on with all the meetings where Nigeria is expected to have a voice except in the African Finance Minister's Conference, which is meant for only holders of the political office of finance minister.
There are speculations among some delegates from Africa over whether the absence of Shamsuddeen who has been a regular face at the IMF/World Bank spring and annual meetings - first as Deputy Governor of the CBN and later as finance minister - had to do with the impending cabinet reshuffle.