Search

 

Cablegate: Economic Perspectives: Cbn New Monetary Policy

VZCZCXRO8151
RR RUEHMA RUEHPA
DE RUEHOS #0592 2351443
ZNR UUUUU ZZH
R 231443Z AUG 07
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 9361
INFO RUEHUJA/AMEMBASSY ABUJA 9144
RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/USDOC WASHDC
RULSDMK/DOT WASHDC

UNCLAS LAGOS 000592

SIPDIS

SENSITIVE BUT UNCLASSIFIED--HANDLE ACCORDINGLY, SIPDIS

ABUJA 1793

E.O. 12958: N/A
TAGS: ECON EFIN PGOV PREL NI
SUBJECT: ECONOMIC PERSPECTIVES: CBN NEW MONETARY POLICY


1. (SBU) Economic analysts see the Central Bank of Nigeria's (CBN)
new economic policy, including redenomination of the naira, as a
cosmetic makeover offering few economic improvements. One analyst
thought the new policy could succeed if it were harmonized with
macroeconomic policy objectives. End summary.

-----------------------------------------Rede nomination Desirable;
But Unnecessary
-----------------------------------------

2. (SBU) Ayo Teriba, CEO, Economic Associates, commented that since
Nigeria was not experiencing hyperinflation, there was no need to
re-denominate the naira, particularly given its recent stability
against the U.S. dollar (USD). He said the naira is convertible
contrary to the Central Bank Governor's statement (Reftel) and
redenomination would not be the best way to achieve a desired
exchange rate level. He further argued that removing two zeros would
not affect the naira exchange rate to the USD as the value would
remain the same.

3. (SBU) Teriba said the new policy is a continuation of the
previous Administration's agenda and the Central Bank's lack of
consultation before announcing the new policy smacks of arrogance.
The Central Bank of Nigeria (CBN) only has operational autonomy and
not strategic independence, he averred, and thought "the Governor is
taking the CBN autonomy too far."

4. (SBU) Biodun Adedipe, a former World Bank consultant, faulted the
CBN Governor's desire to return to the 1985 exchange rate. Exchange
rate stability is more important than the actual rate, he posited.
However, he lauded the current account liberalization policy
starting January 1, 2009 because he thought it would increase
foreign investors' confidence in the economy.

---------------------------------------
Cosmetic CBN Changes Not Tied to Policy
---------------------------------------

5. (SBU) Bismarck Rewane, Managing Director of Financial
Derivatives, called the redenomination "cosmetic" because it was not
linked to policy or administrative changes. He commented that the
CBN's new monetary policy would not only be expensive (reprinting
naira notes) but that it would also entail administrative
consequences arising from trying to add U.S. dollars to the banking
system (Reftel). He called the proposed liberalization of the
Current Account "cosmetic" and warned it could make the system "more
opaque." He criticized the new monetary policy as not being tied to
broad macroeconomic policy objectives such as accelerating economic
growth, achieving sustainable and competitive domestic growth, or
diversifying the economy away from oil dependency. However, Rewane
thought "it is possible" that the new monetary policy could be
harmonized with macroeconomic policies and improve the economy.

MCCONNELL

© Scoop Media

 
 
 
World Headlines

 

Swing States: Gordon Campbell On Why The US Needs MMP

After the bizarre events this week in Helsinki, the world will be hoping and praying that the US midterm elections in November can put a restraining brake on the presidency of Donald Trump. This may happen, but there’s a highly undemocratic reason why such hopes may be frustrated. More>>

ALSO:

putin, trump scalpGordon Campbell: On The White House Romance With Russia

Tough on Europe over trade, at the G-7. Tough on Europe over defence, at NATO. And utterly smitten as usual by Vladimir Putin at the Helsinki summit. More>>

ALSO:


Gordon Campbell: On This Week’s NATO Debacle

For someone routinely cast as a clown presiding over an administration in chaos, Donald Trump has been very consistent about his agenda, and remarkably successful in achieving it, in the short term at least. More>>

ALSO:

NZ Law Society: Rule Of Law Threatened In Nauru

“The recently enacted Administration of Justice Act 2018 is another clear sign of the deterioration of civil rights in Nauru,” the Law Society’s Rule of Law Committee convenor Austin Forbes QC says. More>>

ALSO:

'Fixing' Family Separation: Executive Order Imprisons Families Indefinitely

Amnesty: President Trump signed an executive order today mandating for children to stay with their parents in detention while their asylum claims are processed. More>>

ALSO: