President Umaru Yar’Adua is confident that those who capitalised on leakages in the financial system to make huge incomes may find it difficult next year as the official and parallel markets rates have converged considerably.
When the gap between CBN Wholesale Dutch Auction system (WDAS) and what is popularly referred to as black market rate is widened, speculators often capitalise on the difference to hoard or divert foreign exchange (forex) bought at the official market, thus creating artificial scarcity to enable them sell at much higher rate to make for themselves handsome profit.
The president in his budget speech assured that the country’s external reserves are secured, with reserves at $44.09 billion as at the middle of October this year.
Apparently, Yar’Adua is implying that with the exchange rates reasonably converged, there may be no need to deplete the foreign reserves unduly.
The president said government’s debt position remains sustainable, with an external debt stock of $3.86 billion as at the end of October 2009.
“Indeed, our total public debt is estimated to be less than 10 percent of our Gross Domestic Product (GDP), showing that it is still within acceptable and cautious limits compared to countries in our peer group”, said the president.
Notwithstanding the global economic crisis, the Nigerian macroeconomic environment has improved with macroeconomic stability maintained in 2009 due to government’s proactive response to the crisis.
As a result, economic growth has remained resilient, with real GDP growth for 2009 estimated to be about 5.86 percent. Headline inflation has fallen from 15.1 percent in December 2008 to 10.4 percent in September.
Inflation has however risen to well over 11 percent in October.
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