Nigeria must harmonise Monetary and Fiscal Policies – Finance Minister

Monetary and budgetary policies in Nigeria need to be “harmonised” to boost the economy, the country’s Minister of Finance, Kemi Adeosun said on Friday, adding that moves towards this can be expected.

Nigeria has just unveiled a large increase in budget spending but its currency, the naira, is effectively frozen after the central bank last year imposed a number of restrictions aimed at conserving foreign exchange reserves.

The result has been a widening gap between the official and black market rates. While Nigeria’s fellow oil exporters such as Angola and Russia have allowed their currencies to depreciate, the naira exchange rate is reckoned to be well above fair value.

Investors as well as the International Monetary Fund have called on Nigeria to allow the naira more flexibility and the central bank last week eased some restrictions.

Speaking to Reuters on the sidelines of the World Economic Forum in Davos, Kemi Adeosun said monetary policy was not under her purview but added:

“The central bank (governor) has started to outline some of the changes he is making to increase flexibility. It isn’t my purview but ultimately monetary and fiscal policy must reinforce each other to pull the economy in the same direction, so I am expecting moves towards harmonisation.”