Nigerian Government Spends $8 Billion to Stabilize Naira Amid Economic Challenges

The Nigerian government has reportedly spent approximately $8 billion in its ongoing efforts to stabilize the naira, yet the currency remains under pressure as inflation and forex volatility persist. This revelation was made by Bismarck Rewane, CEO of Financial Derivatives Company, during an interview on Channels Television’s News at 10 on Friday.

Rewane emphasized the scale of government intervention, detailing how authorities have directly injected funds into the forex market while also resorting to external borrowing.

“We’ve also borrowed $4 billion in bond issues. When you take a look at that, you’ll see there is a lot of work. We’ve actually spent almost $8 billion trying to support the naira at current levels,” he stated.

CBN Maintains Monetary Policy Rate

Rewane’s comments followed the Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN) on Thursday, where policymakers opted to keep the Monetary Policy Rate (MPR) unchanged at 27.50%. The decision reflects the CBN’s cautious approach amid prevailing economic uncertainties.

Despite these interventions, the effectiveness of the government’s measures remains in question, particularly given the persistent depreciation of the naira. The continued pressure on the currency, coupled with high inflation, has led to growing concerns over whether further spending on currency stabilization efforts will yield tangible results.

Concerns Over Long-Term Sustainability

Analysts warn that despite the substantial financial commitment, the naira has yet to show significant improvement. The Nigerian government’s strategy of using its foreign reserves and borrowed funds to prop up the currency has drawn criticism from economists who question the long-term sustainability of such measures.

Some experts argue that unless underlying economic issues such as low foreign investment, declining exports, and a widening fiscal deficit are addressed, the naira’s struggles may persist. The fact that $8 billion has already been spent on defending the currency, despite the government’s move to float the foreign exchange market, has further fueled speculation over the naira’s true value.

Comparisons to Previous Administrations

There are concerns that President Bola Tinubu’s administration could end up spending even more on naira defense than his predecessor, Muhammadu Buhari, yet without achieving better results. Under Buhari’s leadership, the CBN also intervened heavily in the forex market, with limited success in curbing currency depreciation.

Critics argue that without structural reforms to boost productivity, industrial output, and export earnings, continued interventions may only provide temporary relief rather than lasting stability for the naira. The excessive reliance on external borrowing to support these efforts could also increase Nigeria’s debt burden, further complicating the country’s fiscal outlook.

The Path Forward

As the government grapples with the challenge of stabilizing the naira, many economists advocate for a shift in strategy. They suggest policies that attract foreign direct investment (FDI), improve domestic production, and reduce Nigeria’s dependence on imports. Structural economic reforms, they argue, will play a crucial role in ensuring sustainable currency stability rather than relying on continuous financial interventions.

While the government remains committed to its intervention strategy, the growing fiscal strain raises questions about how much longer such measures can be maintained. Unless more fundamental economic issues are addressed, Nigeria’s struggle with currency depreciation may persist, despite billions being spent in attempts to stabilize the naira.