GreatZaza:

what about the 30 billion in our external reserve, why not they get one billion from there instead of indebting our future
or is the 30 billion imaginary

You really have no clue what external reserves are do you? You think they are some kind of savings? Do not be misled by the word reserve. Every single naira note including those in your pocket is A CBN DEBT. The Naira note is just a contract between the debtor the CBN and the creditor : Those holding Naira hold it because they believe that there is something behind it. The foreign reserves are asset s of the CBN used to balance its debts i.e bank notes that it issues. If the CBN has no reserves then the Naira it issues is not better that toilet roll. In effect the reserves belong to the creditors of the CBN

If a person is in the habit of spending his salary before month end then his next salary belongs to his creditors and when it hits his account is like foreign reserves but is already spent. As long as he remains employed he will get credit from his landlord , tailor and so on.. Now Imagine he gets sacked but gets dressed every morning as if he is going to work he may tell his creditors he has not been paid and even get credit for a few more months but eventually the truth will out.

In summary all the currency in circulation is CBN debt and that debt has value to the extent that the creditors trust the CBN. The greater the Foreign reserves the greater the Trust. By issue bank notes the foreign reserves have been accounted for(spent) it cannot be spent twice.
Every time a Naira holder tries to buy dollars they are testing the creditworthiness of the CBN, They are asking the CBN the question. This paper that you issued is it worth anything. If the CBN can sell then evrything is fine. If it cannot the exchange rate starts to drop.

Dear God can you just get me out of this Egypt... buhari is too daft for my liking.... I'm just happy he succeeded in becoming Nigeria president, the famine have not started yet..... those useless slowpork from waste coast will still vote for him because Awo brainwashed them into believing in fulani pay masters... TUFIAKWA

deflover:


So you think I am stupid not to understand basic economics
I am a retail investor with 8years experience
Please stop lying about the fraudulent schools in Europe
It won't sell
Besides where did I insult u
I caught you in your lies
So you want to use cheap blackmail
Show us links to your schools Nigerians opened in Europe
Oga

Caught me in my lies? Really?

Where did you insult me? I guess "Guy wetin u drink na" is a compliment.

So, you expect me to give you the names of the schools and the individuals involved? C'mon!

I give up!

aribisala0:
You really have no clue what external reserves are do you? You think they are some kind of savings? Do not be misled by the word reserve. Every single naira note including those in your pocket is A CBN DEBT. The Naira note is just a contract between the debtor the CBN and the creditor : Those holding Naira hold it because they believe that there is something behind it. The foreign reserves are asset s of the CBN used to balance its debts i.e bank notes that it issues. If the CBN has no reserves then the Naira it issues is not better that toilet roll. In effect the reserves belong to the creditors of the CBN

If a person is in the habit of spending his salary before month end then his next salary belongs to his creditors and when it hits his account is like foreign reserves but is already spent. As long as he remains employed he will get credit from his landlord , tailor and so on.. Now Imagine he gets sacked but gets dressed every morning as if he is going to work he may tell his creditors he has not been paid and even get credit for a few more months but eventually the truth will out.

In summary all the currency in circulation is CBN debt and that debt has value to the extent that the creditors trust the CBN. The greater the Foreign reserves the greater the Trust. By issue bank notes the foreign reserves have been accounted for(spent) it cannot be spent twice.
Every time a Naira holder tries to buy dollars they are testing the creditworthiness of the CBN, They are asking the CBN the question. This paper that you issued is it worth anything. If the CBN can sell then evrything is fine. If it cannot the exchange rate starts to drop.

I don't think your explanation completely pans out... the foreign reserve doesn't control the exchange rate... demand and supply does. If your explanation is correct, our exchange rate would have been more worse in the years we weren't saving up and building the reserves. Foreign reserves are savings and investments held in forex in other countries, it is not an imaginary money, its actually a fund, like an account sheltered in foreign banks and managed by cbn. Recently some local banks clamoured for and succeeded in forming partnership with these foreign banks to co-shelter the funds, usually the excess from our earnings... And I think the sovereign wealth fund of countries like saudi is a part of it.
The cbn is pumping dollars from the reserve into our banks and bdcs. .. did the forex appear magically in bank accounts out of thin air?

dumodust:


I don't think your explanation completely pans out... the foreign reserve doesn't control the exchange rate... demand and supply does. If your explanation is correct, our exchange rate would have been more worse in the years we weren't saving up and builfing the reserves. Foreign reserves are savings and investments held in forex in other countries, it is not an imaginary money, its actuslly a fund... And I think the sovereign wealth fund of countries like saudi is a part of it.
The cbn is pumping dollars from the reserve into our banks and bdcs. .. did the forex appear magically in bank accounts out of thin air?

I do not know what you by "CONTROL" , I did not use that word did I > There are many factors that determine exchange rete and demand and supply are importantt but please tell me what is the most important part of supply if not foreign reserves. Please do not put words in my mouth or attribute to me what I did not say.
When the Government sells oil in dollars it monetizes it and shares it
what does that mean? It means that it gives the CBN the dollars and the CBN issues naira to the FG ,this could mean printing new money.,the States ,LGA and so on . States do not spend dollars. T

So these tiers of goverment now have naira which they spend giving it to workers and so on. So tell me who is it that owns the dolllars now? It is all those people who have accepted naira as salary and so on NOT the Government which have taken their "money" as naira. The CBN STILL holds those dollars as "FOREIGN RESERVE" They are nothing to do with Sovereign Wealth Funds

What is money ? before we start talking about real money. If you have no understanding of what money is then really you are out of your depth. No one is saying foreign reserves are not real. The issue is who owns it and what can it be used for. Does it belong to the Governent ? Can they take it and use it to build roads? I have addressed all of this before and I am not about to repeat myself. I spent good money and time educating myself and I suggest you do the same

aribisala0:
I do not know what you by "CONTROL" , I did not use that word did I > There are many factors that determine exchange rete and demand and supply are importantt but please tell me what is the most important part of supply if not foreign reserves. Please do not put words in my mouth or attribute to me what I did not say.
When the Government sells oil in dollars it monetizes it and shares it
what does that mean? It means that it gives the CBN the dollars and the CBN issues naira to the FG ,this could mean printing new money.,the States ,LGA and so on . States do not spend dollars. T

So these tiers of goverment now have naira which they spend giving it to workers and so on. So tell me who is it that owns the dolllars now? It is all those people who have accepted naira as salary and so on NOT the Government which have taken their "money" as naira. The CBN STILL holds those dollars as "FOREIGN RESERVE" They are nothing to do with Sovereign Wealth Funds

What is money ? before we start talking about real money. If you have no understanding of what money is then really you are out of your depth. No one is saying foreign reserves are not real. The issue is who owns it and what can it be used for. Does it belong to the Governent ? Can they take it and use it to build roads? I have addressed all of this before and I am not about to repeat myself. I spent good money and time educating myself and I suggest you do the same

Money has always been legal tender anywhere from time immemorial linked to bullion or gold somewhere... its like a promise, a certificate... but in your argument you always leave the dollar out like if it's not money too or legal tender of some other country. The naira is our legal tender... the foreign reserves is us investing and 'betting' on other forex like individuals with savings do. The money belongs to the individual too and his net worth and credit worthiness will be assessed as such... same way cbn is our bank account and the money it manages is our net worth. Cbn also regulates liquidity but whatever monetization of the dollar proceeds from crude oil sales done is at the prevailing exchange rate and not arbitrary. If lower, the cbn bridges the gap by paying for it ie pumping dollars. My problem is that you are making out foreign reserves to be some imaginary fund that dictates how the naira is issued. For your info, cbn holds money and accounts in naira too... simply put, the foreign reserve is the nigerian federation equivalent of my domiciliary account.
Post a link with the info you are pushing forward about the foreign reserves. .. then i can counter

dumodust:


Money has always been legal tender anywhere from time immemorial linked to bullion or gold somewhere... its like a promise, a certificate... but in your argument you always leave the dollar out like if it's not money too or legal tender of some other country. The naira is our legal tender... the foreign reserves is us investing and 'betting' on other forex like individuals with savings do. The money belongs to the individual too and his net worth and credit worthiness will be assessed as such... same way cbn is our bank account and the money it manages is our net worth. Cbn also regulates liquidity but whatever monetization of the dollar proceeds from crude oil sales done is at the prevailing exchange rate and not arbitrary. If lower, the cbn bridges the gap by paying for it ie pumping dollars. My problem is that you are making out foreign reserves to be some imaginary fund that dictates how the naira is issued. For your info, cbn holds money and accounts in naira too... simply put, the foreign reserve is the nigerian federation equivalent of my domiciliary account.
Post a link with the info you are pushing forward about the foreign reserves. .. then i can counter

You and who? you better go and play and stop talking rubbish.I do not have your time

aribisala0:
You and who? you better go and play and stop talking rubbish.I do not have your time

hehehe... yeah yeah
back up your lectures or go play somewhere else too. nobody was insulting anybody here... just rational people discussing and trying to learn something new, learn to tolerate honest discussion even if its not going the way you want it

Alajiki:


Caught me in my lies? Really?

Where did you insult me? I guess "Guy wetin u drink na" is a compliment.

So, you expect me to give you the names of the schools and the individuals involved? C'mon!

I give up!

So since u can't provide names of your imaginary schools
We can now agree its a lie
You guys are just funny
You throw up dust
And when caught
U are forming i give up
Try being smart by half please

bantudra:
nigeria should leave uno,icc,imf,ai and whatever..let the rest of africa be in such things..

nigeria must not follow the foot step of the rest of africa..for what??...who dem epp??

we can stand very well on our own...we dont need the rest of the world...

Hahaha hahaha see comment! The I.M.F is for the basket case economies. The countries that mismanaged there economy when things were good and they are now seeking cash now that there economy is in trouble.

There is a reason they are called the lender of last resort and that's because they are the ones you run to when no one else is willing to lend you money anymore.

oluwaahmed:



My broda it's organizations like d IMF & co dat put dis current govt in power so as to further impoverish us with deir crazy loans. Dese institutions continue 2 under-develope 3rd world countries in d guise of "monetary/fiscal reforms". D black man is just 2 stupidd 2 undastand dt d white will neva help u 2 develop ur country. I mean if we develope who will now take deir loans & service dem?

Rubbish! The I.M.F is for the basket case economies. The countries that mismanaged there economy when things were good and they are now seeking cash now that there economy is in trouble.

There is a reason they are called the lender of last resort and that's because they are the ones you run to when no one else is willing to lend you money anymore.

caesaR2:
IMF, all the time looking for economies to destroy. And they achieve that, they run away.

Wrong! The I.M.F is there for the basket case economies that squandered there fortunes during the good times and are now desperately looking for money when things have gone sour. They are the lender of last resort. In other words, they are the ones who are willing to loan you money when almost no one else will. Thats one of the reasons they were created.

Tahtah:

A country devalues its currency wen she has lots of goods/services to offer to get foreign currencies from. These goods that are of a high value including capital goods, manufactured goods etc.
South Korea is one of the developed economies in the Far East. They export far more than they import, hence, the devaluation. They produce capital and manufactured goods in large quantities. Services import contributes not small measure to the GNP

You truly don't understand the economics of devaluation do you? In other to keep your currency artificially high we have to burn through our reserves. How smart is that? That's why this people have been saying just leave it and let the market determine the value of the make a instead of the CBN artificially trying to do that because it comes at a significant price.

Earth2Metahuman:
Imf and devaluation

Dem use devaluation do those people.
That's the only policy they know

Devaluation this devaluation that.

Since we have been devaluing, what has it add to our lives?

You truly don't understand the economics of devaluation do you? In other to keep your currency artificially high we have to burn through our reserves. How smart is that? That's why this people have been saying just leave it and let the market determine the value of the make a instead of the CBN artificially trying to do that because it comes at a significant price.

martineverest:
useless imf..who need u ?

Trust me, you need them. There is a reason they are called the lender of last resort and it's because they are they are the ones willing to lend you money when almost no one else will.

The IMF is for basket case economies that squandered there wealth when things were good but now that things have gone bad are now running from pillar to post looking for funds.

chynie:
Prophets of doom

We won't crash anything
Is Nigeria a bike?

Nigeria is doing almost the same thing Venezuela is doing and they are warning you and you are here making proclamations as if you know a thing or two about why nations economies crash.

This imf guys have probably been there for a while and they have probably seen every basket case economy come and beg them for loans so they are most likely experience than you in this sort of things.

daneni1:
Why is it that the only solution IMF are always after is in the devaluation of the currency?

Prescribing same drug for all ailment is the only thing IMF is known for.

You truly don't understand the economics of devaluation do you? In other to keep your currency artificially high we have to burn through our reserves. How smart is that? That's why this people have been saying just leave it and let the market determine the value of the make a instead of the CBN artificially trying to do that because it comes at a significant price.

chukzyfcbb:

no mind them. its because it favours them since they hold a stronger currency.
devaluation adds no value to an import dependent country.
when we devalue, they will now come with thier dollars and be claiming foreign portfolio investors.
God punish them

You truly don't understand the economics of devaluation do you? In other to keep your currency artificially high we have to burn through our reserves. How smart is that? That's why this people have been saying just leave it and let the market determine the value of the make a instead of the CBN artificially trying to do that because it comes at a significant price.

wink2015:
The Nigerian economy will continue to go worse so long as the Northern Ruling Class supported by some of their yoruba friends refuse to accept restructuring.

The north want to continue to depend on the south especially the Niger delta region for money to run their affairs. They just want to empty the resources of the Niger delta and then tell them bye! bye! and they will now go and exploit their agriculture in the north.

They take IMF Loan they want to pay the loan with money from the Niger delta region.

We need true federalism in Nigeria. We must go back to the post 1960 political system where the three main region were paying taxes to run the central government while fully controlling the resources in their domain.

Hausa most especially must take their long throat from Niger delta oil money. They must take their long throat from VAT coming from Lagos state.

Each of the 36 states or 6 geo-political zones must be generating money to fund the federal government.

The days of our federal system is numbered.

Restructuring of our political system is definately inevitable.

Gram! Gbam! Gbam! Finally someone who understands.
The problem is that Nigeria does not have the bold leadership to implement those reforms that you suggested or to make rhe hard choices. They are most likely not courageous enough to do it or are not convinced of your solutions.

musicwriter:
I just posted on the other thread the world Bank and IMF are our worst nightmare now that the Naira is gradually recovering. Obviously, they don't like the good news coming out of Nigeria now. They expected it worse.

You truly don't understand the economics of devaluation do you? In other to keep your currency artificially high we have to burn through our reserves. How smart is that? That's why this people have been saying just leave it and let the market determine the value of the make a instead of the CBN artificially trying to do that because it comes at a significant price.

Champele:
This peopel just want to be controling someone's country from abroad. See instructions.like we are their gateman. Does it mean we lack sound economist whom can tell us our problem and the solution out of it. I tire o!

Yep. Sounds like it. Or you probably have them but don't listen to them

davidif:




Nigeria is doing almost the same thing Venezuela is doing and they are warning you and you are here making proclamations as if you know a thing or two about why nations economies crash.

This imf guys have probably been there for a while and they have probably seen every basket case economy come and beg them for loans so they are most likely experience than you in this sort of things.

Mr economy crashing professor.
Since you know a lot about it, then go and get the loan.
This kind of news also led to what they want. It sends bad signals affect the normal flow of dd & Ss in the market. Then ushers in their needed recession and ppl will start screaming they said so

davidif:


You truly don't understand the economics of devaluation do you? In other to keep your currency artificially high we have to burn through our reserves. How smart is that? That's why this people have been saying just leave it and let the market determine the value of the make a instead of the CBN artificially trying to do that because it comes at a significant price.

You devalue wen you have exports. This makes your exports cheap to the consuming countries, thereby having a surplus BOP, or to some extent balanced BOP. IMF wants market to determine the exchange rate while we have deficit BOP- our country is a consuming one. We mainly export primary products this will not give good value. IMF also wants us fix social n physical infrastructure which can not be achieved 20years time. This infrastructural devt will bring about economic growth n devt. Hence we will be able to maintain floating exchange rate. If we allow the market to determine the exchange rate, the poor will suffer as we are having now cos the economy is not developed

lagdmark:
IMF have been warning developing countries since 1900+ still nothing dey happen

Ehn!!!!! Go and ask venezuela, argentina, Brazil, Russia, Zimbabwe and many others what happened to them.

signz:


Chief IMF is our only hope of getting cheap interest loans since we don't want to make the hard decisions.

IMF polices worked with other countries so why is Nigeria different. Will you want to give loan to someone that doesn't want to cut down on his extravagance livestyle? Won't you tell that person that before you give him loan he must change your lifestyle and you must see how he intends to pay back?

As things are now we have no choice. Oil price is heading south. US shale has made nonsense of the OPEC cut,there is oil glut and Trump wants to drill oil anywhere oil can be found in US.

We need IMF now more than they need us. In Fact they don't even need us sef

Abeg lecture this people jare. The ignorance on this thread is becoming annoying.

chynie:

Mr economy crashing professor.
Since you know a lot about it, then go and get the loan.
This kind of news also led to what they want. It sends bad signals affect the normal flow of dd & Ss in the market. Then ushers in their needed recession and ppl will start screaming they said so

Read the quote from the guy above me.^^^

NubiLove:


I would advise you to stop being daft. The requirements Nigeria has to follow are the one made by world bank and AfDB. Even a teenager in SS1 knows that IMF and the world bank are two competing organizations.... your forex business is at stake so you need to hope that the Naira keeps worsening...

I am not saying they would waive it... I am saying that the requirements world bank and AfDB is giving Nigeria is NOT devalue or we wouldn't give you the loan... the way IMF ALWAYS does!

The requirements of world bank and AfDB are going to be slightly different from IMF whose mantra is always devalue.

But, there has been no serious issue for world bank or OPEC to predict that the price of oil would crash in 2017.... oil production is now up. since militants have stop bombing...open your brain.... the dollar rise is reversing for now....

mr go and buy dollar and keep in your house so that rat would eat it.... nobody would follow your advice.

The imf are the lender of last resort while the world bank is not. The world bank is for long term loans (mostly for capital projects like infrastructure spending etc) while the imf is for short term loans (mostly emergency funds) so you see that both organizations are not competing for each other as they have different goals.

The imf is for basket case countries who have squandered there wealth in good times and are now desperately looking for cash. They are ones you run to when no one is willing to lend you anything anymore hence the reason they are called the lender of last resort.

davidif:


Abeg lecture this people jare. The ignorance on this thread is becoming annoying.

Nobody says that IMF is wrong, but we are saying our economy has an infrastructural deficit- not developed so things aren't going fine, we can't compete in global market. We can't keep a floating exchange rate. The economy is not developed. We have not got to fix things. And we can't fix things the next twenty years. And we have to keep moving.

davidif:


Abeg lecture this people jare. The ignorance on this thread is becoming annoying.

Nobody says that IMF is wrong, but we are saying our economy has an infrastructural deficit- not developed so things aren't going fine, we can't compete in the global market. We can't keep a floating exchange rate. The economy is not developed. We have not got to fix things. And we can't fix things the next twenty years. And we have to keep moving.

aribisala0:

I am not really sure what your point is I am not suggesting pegging the Naira.
As far as devaluation goes that is only meaningful when you have something with added value to export.Nigeria exports mainly commodities and that has NOTHING to do with our exchange rate.

So I don't know what product it is we have that would become more attractive with devaluation.
Devaluation of itself cannot make a country more productive if it was that easy why is not every country doing it . It is a silly and childish idea if not properly contextualized. World trade does not operate in a vacuum. Actions trigger reactions and so on.
Rather that talk about textbook stuff talk reality.
MENTION ONE product or INDUSTRY that devaluation would help in the NEXT 12 months.

In case you travelled somewhere and have not returned.
Nigeria's currency devalued alrady by MORE THAN 100 % in under 2 YEARS since 2015
What is it that we are now exporting more of and what impact will that have overall. Tell us how muchh FDI this over 100% has brought? The reality is it has dropped MASSIVELY

You forget that for a country that manufactures nothing or next to nothing devaluation means increased prices of imports and therefore massive inflation such as we have already seen .Devaluation is good for China because they manufacture virtually everything and virtually everything they export is a VALUE ADDED product.
i.e Exportation of goods = Importation of Jobs
There is a cost to devaluation too. An actual CASH COST too.
State and Federal governments have dollar denominated debts and devaluation means they have to collect even more naira as tax and revenue to service their debts.Who bears the brunt of that. The moment that happens the interest rate for that country in the world market goes up. The most recent Eurobond attracted 7.85%

Bros, you truly don't understand the economics of devaluation do you? In other to keep your currency artificially high we have to burn through our reserves. How smart is that? That's why this people have been saying just leave it and let the market determine the value of the make a instead of the CBN artificially trying to do that because it comes at a significant price.

Tahtah:

Nobody says that IMF is wrong, but we are saying our economy has an infrastructural deficit- not developed so things aren't going fine, we can't compete in the global market. We can't keep a floating exchange rate. The economy is not developed. We have not got to fix things. And we can't fix things the next twenty years. And we have to keep moving.

You truly don't understand the economics of devaluation do you? In other to keep your currency artificially high we have to burn through our reserves. How smart is that? That's why this people have been saying just leave it and let the market determine the value of the make a instead of the CBN artificially trying to do that because it comes at a significant price.

Alajiki:


Check the history of Nigeria and IMF well...it's always been like this. If there's anything IMF is known for, it's pro-devaluation. They attack economic policies left right and centre to lower credit risk rating and discourage would-be lenders.

While I agree with you that the current forex regime is not sustainable, I want you to know that what government is doing now has to be done. It's a risk worth taking while hoping for an improvement in international oil price and at the same time cheking our dependence on oil and importation of consumer goods.

Nigeria is a peculiar and very funny country whose citizens derive more joy in sabotaging her economy. You can imagine demand for PTA only to take same to the black market. Even Nigerians have started opening "schools" in Spain and other liberal European countries just to issue fake admission letters out to fellow unscrupulous maniacs to access Form A and bring same back to the parallel market. ROUND TRIPPING CARTEL.

On the current forex regime, I stand with Buhari.

You truly don't understand the economics of devaluation do you? In other to keep your currency artificially high we have to burn through our reserves. How smart is that? That's why this people have been saying just leave it and let the market determine the value of the make a instead of the CBN artificially trying to do that because it comes at a significant price.