The former Central Bank of Nigeria (CBN) Governor, Prof. Charles Soludo yesterday cracked down on the key economic policies of the Federal Government, saying their execution won’t take the economy to its destination.
He says the Treasury Single Account, the CBN’s foreign exchange policies, and bailout funds for state governments are all in awful state, Nigeria must do something about it.
“The ex-CBN governor who spoke on the theme: ‘It’s the Nigerian Economy, Stupid” at the third anniversary lecture of Realnews held in Lagos, said the CBN’s forex policies are not in the best interest of the economy, arguing that fixed exchange rate is a disincentive to investors”.
Soludo says the political issues of Naira devaluation and CBN’s promotion of the fixed exchange rate standard is bad for the economy.
The ex-Central Bank of Nigeria Governor said: “In my five years at the CBN, we maintained undervalued real effective exchange rate. Delayed adjustment of the Naira value is dangerous because investors don’t wait”.
In addition, he said the forex policy of the CBN has triggered a massive lobbying for the greenback.
“CBN thinks capital control saves reserves. But that is not true. Capital flow works on reverse psychology. If you make it so difficult for investors to take out their money, it will be difficult for them to invest,” he said.
He questioned the CBN to clarify why it pegged the Naira at N197 to a dollar, saying it wasn’t right to arbitrary pick numbers.
“The market will react if investors find out that the Presidency controls the CBN. There should be independent of the CBN,” he said.
Soludo speaking further, he said CBN’s bailout funds to the states was a mix-up that should not be repeated contending that the Fiscal Responsibility Act have to be fully implemented in order to function properly.
On People’s Democratic Party, the former CBN Governor said the PDP party had grown too strong for Nigeria and was taking power for granted.
He concluded by saying that the current government must succeed and that failure is not an option.