Banks operating in the country have been given guidelines by the Central Bank of Nigeria, CBN, on foreign exchange settlement rate for eligible pre-SEEM transactions covered by the transitional arrangement.
According to the CBN, the burden of foreign exchange depreciation in respect of deferred payments and external loan, buyers and suppliers credit repayment bills for collection, open account and unconfirmed letters of credit are to be bore by the importer, his banker and the Central Bank.
Transactions to receive the same treatment are all outstanding post 1983 confirmed letters of credit which have been established not later than September 26, 1986, invisible trade transactions as well as third currency auction.
According to the CBN approved official rate of the naira to the dollar as at September 26, 1986 is N1.50 to US 1 dollar.
This rate will be the basis for computing the amount in monetary terms of the burden each of three parties will bear.
This CBN guidelines now lay to rest the settlement rate issue which have been the basis of ranging controversy between importers, their bankers and the federal government.
In his appraisal of the structural adjustment programme, SAP, in June this year, the minister of finance, Dr. Chu Okongwu had said that the settlement rate issue was a serious one the federal government alone could not fund.
According to him then based on settlement rate equivalent to the first-tier rate prevailing on September 26, 1986 and the pre-SFEM obligation outstanding with CBN as at May 29, 1987 total subsidy on export was computed and put at N6.8 billion.
As a result of the staggering sum involved, Chu Okongwu said then that government alone cannot take on the burden and said that banks might be called on to bear part on the burden on the grounds that banks availed themselves of customer deposit in respect of transaction awaiting foreign exchange allocation.
The circular has however confirm speculation that government would absorb part of the subsidy as a result of the concessionary exchange rate.