To Stabilize Naira, Analysts Urge Govt. To Secure Long Term Foreign Loans

Bola Tinubu, President, Federal Republic of Nigeria

Experts have called on the federal government to secure long-term foreign loans to clear foreign exchange forwards, foreign portfolio investors, and trapped airline funds.

It could be recalled that the Association of Bureau De Change Operators of Nigeria (ABCON) has said that the $2.2 billion prepayment facility from the African Import Export Bank (AFREXIMBANK) is not enough to stabilize the market.

According to him, the $2.2 billion crude oil prepayment facility released by the African Import Export Bank (Afrexim Bank) is not enough to stimulate the market.

The President of ABCON, Aminu Gwadabe, said, “the $2.2 billion Afrexim Bank crude prepayment facility is a welcome development, but I don’t think it’s enough to stimulate the market considering the situation because if we put $2.2 billion into the market, we have been seeing demand in the I&E window alone ranging from $150 million to $250 million daily, so, in 10 days, the $2.2 billion will be exhausted. Speculators will speculate, and we will run it out between 10 to 15 days.”

However, speaking on how to make the market liquid, the founder, Cowry Asset Management Limited, Johnson Chukwu, said only a long-term loan with a span of at least five years.

According to him, that would help the government plan about the repayment as well as stabilize the foreign exchange market.

“An option is to arrange a long-term loan whose latest repayment won’t be less than 5 years so that the government can clear the arrears, and it will also stabilize the foreign exchange market before repayment.

“There are matured forwards of about $6 billion; there are money-owed airlines, Foreign Portfolio Investors and so on, so the money owed will determine the loan that would be needed to pay the outstanding debt and make the market liquid.”

Also speaking, Kunle Olasanmi, said expected inflows from external borrowing, donor support, oil production, and sales receipts would stabilise the FX market.

According to him, a stronger Naira will attract foreign investment, encourage local businesses to expand, increase the purchasing power of households.

“Long term loan from the International Monetary Fund (IMF), Middle East among others will make the government settle all the outstanding obligations and as well stabilize the market,” he stated.

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