COVID-19 Could Trigger Naira Devaluation—Buhari’s Economic Squad

By Dipo Olowookere

The Presidential Economic Advisory Council (PEAC) set up recently by President Muhammadu Buhari has warned him that if tough economic decisions are not quickly taken, Nigeria may be forced to devalue the local currency, Naira, which the present administration is strongly against.

Some days ago, there were fears and speculations that the Central Bank of Nigeria (CBN) may eventually succumb to exchange rate realignment, but the apex bank announced that such was not underway, threatening to deal ruthlessly with those pushing the exchange rate up at the various market segments via hoarding.

The Naira had risen to N400 to a Dollar some days ago at the parallel market until the CBN’s statement, which moderated it back to N380 to N365/$1 at the black market.

The Senior Special Assistant to President Buhari on Media and Publicity, Mr Garba Shehu, released a statement on Thursday afternoon, where he said his boss held a meeting with his economic squad in Abuja.

Mr Shehu said during the meeting, President Buhari directed a repositioning of the economy, starting with a review of 2020 budget to reflect realities in oil sector, and prioritizing health sector infrastructure to respond to the threats posed by COVID-19.

He said at the meeting, the economic advisory council recommended securitisation of government debt, design and institutionalisation of a revenue stabilisation programme and the imperative of cutting the cost of governance at all levels.

According to him, the group said the coronavirus pandemic could have indirect effect on Nigeria’s other trading partners and the global economy, with implications of global recession that could slow down the country’s “fragile growth and trigger exchange rate realignment.”

It was stated that Mr Buhari agreed with the team headed by renowned economist, Mr Doyin Salami, “on the need to prepare the country to take the necessary tough economic decisions.”

While reviewing the state of the Nigerian economy, its continued fragility and vulnerability to external shocks in spite of recent gains in output growth worried the economic team.

Members of the group noted, with concern, the changing economic fundamentals – as manifested in a renewed cycle of rising prices and weaknesses in the external sector.