The administration of Nigeria’s balance of payments: any role for exchange rate policy?

The immediate post-World War II trade boom and the oil boom starting from the late sixties insured balance of payments surpluses in Nigeria. The effect of the payments deficits of the intervening years was minimised by drawing down accumulated reserves and imposing restrictive measures to fight payments difficulties. Nigeria devalued the naira in 1973 mainly to forestall possible capital outflow. The subsequent performance of exports and imports casts doubts on the appropriateness ef exchange rate adjustment in combating payments imbalance in a primary producing economy. Noting the Nigerian economic situation and the relative effectiveness of alternative measures for combating external disequilibrium, a policy mix including a flexible exchange rate would be appropriate. Notes, tab.