The Debt Management Office (DMO) has explained why receiving crude oil payments in Naira rather than in dollars is not a good idea for Nigeria.
Patience Oniha, the agency’s director-general, revealed this during a question-and-answer session at Covenant University in Ogun State on Thursday during the national budget roundtable and panel discussion.
The institution’s Centre for Economic Policy and Development Research (CEPDeR) hosted the budget roundtable, which was themed ‘National Budgeting for Economic Recovery and Sustainable Development in Nigeria’.
Patience Oniha, director-general of the agency, explained that payment for Nigeria’s crude oil in Naira would translate to Nigeria’s external reserves and currency decline.
She said, “Nigeria has been dependent on external reserves, from which the Central Bank of Nigeria sells foreign exchange. So, if we say we should receive dollars in Naira, Nigeria’s external reserves and exchange rate are headed south, so it’s not such a great idea.”
She stated that, despite current crude oil prices being at record highs, Nigeria has been unable to fully benefit due to its failure to achieve output quotes, owing to bottlenecks such as crude oil theft.
She also stated that more work needs to be done in terms of currency rate availability, stability, and predictability and that foreign investors are more concerned with the predictability of the exchange rate than the actual rate.
She said, ”When it comes to FDIs, sometimes what they need is a predictable exchange rate so that they can conduct their feasibility assessment and determine whether the project is profitable.” (Nairametrics)
