Advisers of President Bola Ahmed Tinubu have said that for the country to target an exchange rate of between N500 and N600 naira to the dollar, it would need to shore up its reserves to $60 billion.
As of June 15, the 30 days moving average of Nigeria's external reserves stood at $34.6 billion according to the latest data on the website of the Central Bank of Nigeria. This means that the country would need to double its reserves. The country's foreign exchange reserves, which had risen to $37.21 billion at the beginning of the year, has since been on the decline.
A policy document prepared for the government by a panel of advisers proposed a doubling of exports to support the new government's growth ambitions. International news agency, Reuters, said Nigeria would need to more than double exports from $42.4 billion last year.
President Tinubu had since his inauguration on May 29 this year made good his word to reform the economy with a series of actions. In his inaugural speech, he announced the end of petrol subsidy in the country whilst mentioning an overhaul of the monetary policy.
Two weeks into his tenure, he suspended the governor of the Central Bank of Nigeria while restrictions on the foreign currency market has been removed, leading to the naira falling to record lows at the official market.
The report from Tinubu's policy advisory council, seen by Reuters on Friday, proposes reforming the central bank, including a halt to its quasi-fiscal or so-called development operations that accelerated under suspended governor Godwin Emefiele.
About $50 billion to $60 billion in reserves and monthly inflows of up to $8 billion in export earnings and other capital inflows "will be required to support the policy at an exchange rate of N500 to N600 to the dollar," the report said.
This would be achieved by ramping up production of oil and gas, lifting manufacturing exports and attracting investment in light electronics assembly, fertilisers, sugar and palm oil.
The revenue authority, customs and maritime agencies would be collapsed into a new single Nigerian Revenue Service to improve tax and revenue collection, the policy document showed.
With more revenue, the government can ramp up capital expenditure to 25 per cent of gross domestic product from four per cent, and narrow the budget deficit to three per cent of GDP, down from 4.78 per cent estimated for this year, the document said.
