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 Periodical article |
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| Title: | Options for long-term management of foreign exchange in Nigeria |
| Author: | Obi, A.W. |
| Year: | 1986 |
| Periodical: | The Nigerian Journal of Economic and Social Studies |
| Volume: | 28 |
| Issue: | 1 |
| Pages: | 45-69 |
| Language: | English |
| Geographic term: | Nigeria |
| Subjects: | money economic policy |
| Abstract: | A country's approach to foreign exchange management depends, amongst others, on overall national objectives, the role of foreign exchange in national development, and the character of the State. For Nigeria the overriding medium and long-term objective of development policy ought to be that of redressing the existing structural imbalance in the economy, primarily by way of creating a substantial domestic capital goods sector, and through export diversification. The main objective of foreign exchange policy should be to get Nigeria to live within current levels of foreign exchange earnings, including the liquidation of outstanding foreign debts certified to be genuine, and the accumulation of a reasonable margin of reserves as a protection against future fluctuations in earnings. To this end a range of policy options is available, from exchange rate variations (e.g. outright devaluation or adjustment through a crawling peg), through multiple exchange rates and variations in the rates of tax-cum-subsidy ('disguised devaluation'), to exchange controls. The author opts for the multiple exchange rate system, whereby the price mechanism can play a significant role in resource allocation, but in the context of priorities set administratively. Bibliogr., notes, ref. |