Bola Ahmed Tinubu,
presidential candidate of All Progressives Congress (APC), says his
administration will optimise the country’s foreign exchange (FX) to strengthen
the naira as well as reduce foreign debt to achieve a productive economy.
Tinubu said this in his manifesto tagged ‘Renewed Hope
2023’.
He said the exchange rate is the most evocative monetary
issue of the day as it “stirs emotions and feelings of national pride or
embarrassment, depending on the rate of the day and the trend it suggests”.
According to Tinubu, the FX rate influences the costs of imports, the competitiveness of exports, and net capital flows, among other things.
“It cannot be ignored
nor left to the vagaries of an unrestrained market,” the presidential candidate
said.
“Yet, we must be precise regarding economic cause and
effect. The recent dip in our exchange rate is primarily due to global supply
and production shortfalls caused by global factors well beyond the scope of our
control. Our diminished levels of oil production and the modest capacity of our
manufacturing sector to expand production both serve to compound the pressure
on the naira.
“Further compounding our difficulty is the fact that we are
tied to an ineffective regime of multiple, somewhat arbitrary, exchange rates.
This situation gives rise to financial dislocation, currency speculation and
arbitrage. These practices divert much-needed funds away from productive
endeavours that could employ hundreds of thousands of people and create
products that improve average living conditions.
“To ensure that
exchange rate policy harmonises with our goals of optimal growth and job
creation driven by industrial, agricultural and infrastructural expansion, we
will work with the Central Bank and the financial sector to carefully review
and better optimise the exchange rate regime. Our economic policies shall be
guided by our desire for a stronger, more stable Naira founded upon a vibrant
and productive real economy.”
‘REDUCE FOREIGN LOANS’
On foreign debt, Tinubu said the country can protect its
exchange rate, “guard against inflation and preserve foreign currency reserves”
by limiting its exposure to large debt obligations denominated in foreign
currency.
Nigeria’s debt profile has remained a hot topic in the
public – one often seen as harmful to its economy.
As of March 2021, Nigeria’s total public debt hit N33.1 trillion
($87.24 billion) — an accumulation of borrowings from successive governments,
of which most were borrowed since the return to democratic rule in 1999.
In the first
quarter of 2022, the country’s public debt rose to N41.6 trillion from N39.56 trillion recorded at the
end of December 2021.
The country’s debt stock continued to rise such that the
cost of servicing debt eventually surpassed the
federal government’s retained revenue by N310 billion in the first four months
of 2022.
Tinubu believes that his administration, if he’s elected
president, will efficiently manage the country’s appetite for foreign
borrowings.
“Our administration
will engage in extraordinary prudence in contracting debt in foreign currency.
Our policy will be such that new foreign currency debt obligations will be
linked to projects that generate cash flows from which the debt can be repaid,”
he added.
“Where possible, we shall limit such foreign
currency-denominated debts to essential expenditures that cannot be adequately
addressed by either naira-denominated expenditures or debt obligations.”
‘PHASE OUT FUEL
SUBSIDY’
Tinubu said one of the goals of his administration is to
achieve stability in the supply of petroleum products by fully deregulating the
downstream sector and ensuring that local refinery capacity will meet domestic
consumption needs.
To achieve this, he said his government “shall phase out the
fuel subsidy yet maintain the underlying social contract between government and
the people”.
“We do this by dedicating the money that would have been
used on the subsidy to fund targeted infrastructural, agricultural and social
welfare programs ranging from road construction, to boreholes, public
transportation subsidies, education and healthcare funding programs,” he said.
“In this way, the funds are more directly and better
utilised to address urgent social and economic needs.
“Our planned approach will not only mitigate the price
effects of deregulation but will also result in the significant expansion of
public infrastructure and improvement of the public well-being.
“Subsidy removal and deregulation are, however, only part of
the solution. To further increase our refining capacity, we shall focus on the
rehabilitation of the nation’s refineries and shall consider, as a model, the
joint venture partnership arrangements implemented by other leading oil
producing states and global petrochemical firms.”
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