Andersen in Nigeria, a global tax and business advisory firm, has stated that the eventual removal of petrol subsidy and expected coming into operation of the Dangote Refinery and the Port Harcourt Refinery would enable the Central Bank of Nigeria to adopt a pro-market foreign exchange rate management that would close the gap between the official and parallel market rates.
“In my view, with Dangote Refinery coming in, with the Port Harcourt Refinery coming in and with the removal of subsidy, Nigeria will have no business pegging Naira’s exchange rate to the dollar because the rationale behind the peg is already eliminated. If you then take away the peg, then the market forces more or less will determine the exchange rate.
It said: “The growth of the Nigerian economy from a monetary policy perspective is going to be dependent on the ability of the CBN to and the MPC to successfully curb inflation rates earlier in the year to enable them to start implementing an expansionary monetary policy by reducing the MPR thereby boosting the economy through reduced cost of borrowing by businesses for investment purposes.”
“The relative high cost of borrowing means investments by businesses will be hampered contributing to the slowdown of economic growth,” it said.