FG spends $8bn to defend Naira amid economic uncertainty

The Federal Government has spent approximately $8 billion in efforts to stabilize the naira amid ongoing economic challenges, according to Bismarck Rewane, CEO of Financial Derivatives Company.

Speaking on Channels Television’s News at 10 on Friday, Rewane highlighted the substantial financial interventions made by the government to manage exchange rate volatility and curb inflation.

His remarks followed the Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN), which decided to retain the Monetary Policy Rate (MPR) at 27.50% on Thursday.

Rewane revealed that, beyond the billions spent defending the currency, the government had also raised additional funds through debt instruments.

“We’ve also borrowed $4 billion in bond issues. When you take a look at that, you’ll see there is a lot of work. We’ve actually spent almost $8 billion trying to support the naira at current levels,” he stated.

Despite these efforts, the naira remains under pressure, with concerns over the effectiveness of government policies in stabilizing the economy.

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Rewane also addressed the rebasing of Nigeria’s inflation data, which has led to conflicting interpretations of economic realities. He pointed out that the National Bureau of Statistics (NBS) adopted a new methodology to measure inflation, yielding figures that some analysts find questionable.

“There’s no way that inflation can reduce by 10% in a short period. The man on the street does not believe that inflation has come down as sharply as that,” he remarked, expressing skepticism over the reported figures.

Speaking on the outcome of the MPC meeting, CBN Governor Olayemi Cardoso stated that the committee acknowledged recent macroeconomic developments that could positively impact price stability in the near term.

“At this meeting, the Monetary Policy Committee noted with satisfaction the stability in the foreign exchange market, the appreciation of the exchange rate, and the moderation in the price of petrol (PMS),” Cardoso said.

However, he also admitted that inflationary pressures remain a concern, particularly those driven by rising food prices.

“Members, however, were not oblivious of the persisting inflationary pressures, driven largely by food prices. The Committee noted the recent rebasing of the Consumer Price Index (CPI) by the NBS, which reviewed the weights of items to reflect current consumption patterns,” he added.

While government reports suggest that inflation is moderating, market realities paint a different picture. Consumers continue to struggle with the rising cost of living, raising questions about the long-term effectiveness of the CBN’s monetary policies and the government’s exchange rate interventions.

With foreign exchange volatility, debt accumulation, and concerns over inflation accuracy, Nigeria’s economic outlook remains uncertain, and all eyes are on the next steps from policymakers in managing the nation’s financial stability.