CHAIRMAN, Senate Committee on Finance, John Enoh (PDP, Cross River Central), has called on the federal government to take urgent steps to diversify sources of foreign earnings and bail out the naira from its continuous slide against other currencies in the international market. Enoh, who made the call yesterday while fielding questions from journalists on ways out of recession, said government alone through the Central Bank of Nigeria, CBN, cannot sustain the market. According to him, a situation where the CBN accounts for
over 90 percent of forex supply into the forex market without input from other viable sources is bad, adding that the naira will remain weakened due to heavy demands for dollar and other foreign currencies against it. He added that in reducing the continuous slide of the naira at the parallel market, CBN may have to lift its ban on 41 items delisted from official forex earnings by their importers last month. A policy which he said had led to further weakening of the naira at the parallel market as a result of heavy demand for forex by importers of the banned items like cement, rice, margarine, palm oil product /
palm kernel etc. “The main challenge of this recession is sources of foreign earnings. If you go to the streets and they say that a dollar is N430 to the naira and that is where the problem starts. So really, why is it so and we need to get back to the very fundamentals. We have transited from involvement in which there was steadfastness in terms of having to fix the exchange rate for too long. “We got to a point in which tbe CBN tried to make it flexible and how many months after that policy the gap is still there. That means there is something wrong and it is not being addressed, that means some of the expectations on the part of the policy makers in floating the exchange rate haven’t been met. “What were those expectations? That if you float it will make it attractive. That means people with foreign capital are going to bring in money because government alone cannot sustain the market. So far it is government alone that is providing more than 97 percent of the foreign exchange that is bidded. That is where the problem is. “They must close the gap and as long as that remains there is still going to be a continuing gap between the official rate and parrell rate. As long as that remains you are going to discover more demand than supply. That is elementary economics. As long as those who need the dollar outweigh the supply side then maybe we have come to a point where the CBN has to look at those items that it banned.” He, however, said the economic team are not frustrated over the problem at hand as it is being insinuated by some Nigerians, saying ‘I don’t want to think that they are frustrated. They are also as equally challenged as you and I are and that is because it is their duty to do the work. They are aware of public expectations as far as the problems are concerned”.

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