Lagarde: Nigeria needs a ‘sensible’ FX policy

Christine Lagarde, managing director of the International Monetary Fund (IMF), says Nigeria needs to adopt a “sensible” foreign exchange policy as it strives to fend off external economic shocks.

Speaking at a press conference in Washington, Lagarde said the IMF was willing to give loans to Nigeria, Azerbaijan and other member countries if they get to need it.

“The IMF remains available to all its members, so the moment we are asked to help, we’ll do the best we can to help,” she said.

“Both countries, Azerbaijan and Nigeria, have been hard hit by the oil price decline shock, because their economies depended heavily on oil exports, both in terms of trade, and in terms also of revenue.

“When you lose a lot of that, because the price decline was about 70 percent, then clearly it puts the economy under shock.”

While saying Nigeria’s response to the economic shock had not been good enough, she applauded Azerbaijan’s fiscal approach to the same problem.

“Policies adopted by the two are different. Azerbaijan has certainly taken a good fiscal approach, is reassessing spending, is really trying to restore its position, and it’s also using the exchange rate as a buffer.

“Nigeria is not there, and we certainly hope that in terms of identification of fiscal resources, removal of oil subsidies, an exchange rate policy that is sensible, in the sense that it is not going to waste reserves, we have in particular indicated that a persistent pegging of the naira would not be such a good idea.

“So, they have to adopt their policies, they have to adopt their model, and if they need IMF’s help, we’ll be ready to help. No question about that, and no stigma associated with it.

“They are clearly victim of an external shock, and they have to face a response, which is a national response to that situation.”