* Nigeria set FX controls to save reserves
* Action has impacted imports, trade with others
* WTO chief to discuss FX issues with Nigeria c.bank
* At least nine WTO members have voiced disquiet
(Adds countries concerned about FX curbs)
By Felix Onuah
ABUJA, March 15 (Reuters) - The World Trade Organization is
concerned about Nigeria's foreign exchange management and how it
has been used to support manufacturing, exports and imports, the
global body's director-general said on Monday.
Ngozi Okonjo-Iweala - a former Nigerian finance minister who
took the top job at the WTO this month - said some WTO members
had brought complaints and that Nigeria needed to explain its
foreign exchange regime to them.
Okonjo-Iweala said Nigeria had invoked WTO's agreement on
balance of payment to conserve foreign exchange.
Nigeria's balance of payment gap hit $14 billion in 2020 as
a result of a wider budget deficit triggered by a COVID-induced
oil price crash that slashed revenues, weakened the naira and
caused dollar shortages.
"It invoked this article but some other members have brought
a complaint against us that we shouldn't have used this article
in that way," Okonjo-Iweala told reporters after meeting
Nigerian President Muhammadu Buhari.
"So, yes, the WTO is concerned about foreign exchange, the
way we manage it and how we use it to support manufacturing,
export and import in our economy."
Nigeria's central bank, seeking to conserve its dollar
reserves, curbed access to the interbank market for a wide range
of importers to boost local production. It set up a multiple
currency regime in 2015 to manage pressure on the naira.
Since then, some firms have defaulted on contracts, lost
credit lines and have had to deal with foreign suppliers worried
that they will not get paid, while the currency has lost ground
against the dollar, the local chamber of commerce has said.
TRADE CONCERNS
At least nine WTO members including the United States and
European Union first raised concerns about the trade-related
impact of the rules at a meeting of the WTO's Council for Trade
in Goods in 2015.
Washington cited the effect on U.S. exports such as
agricultural goods, plastics, aircraft and aircraft parts and
metal and metal products that were worth $500 million in 2013
and 2014, a WTO official said.
Other countries with concerns were Thailand, which was
worried about the impact on agricultural shipments; Norway and
Chile, which feared the impact on fish; and Switzerland,
Uruguay, Iceland and Malaysia over the "systemic" impact.
Okonjo-Iweala said she would meet Nigeria's central bank
governor to address some of the issues.
Nigeria's central bank has favoured a strong naira, a policy
backed by Buhari who sees it as a matter of national pride. The
bank has argued that a weaker naira will stoke inflation, which
has been in double digits since 2016.
The central bank has rejected calls for a more flexible
currency, which the International Monetary Fund and the World
Bank have said will help Nigeria absorb future shocks.
But the bank has battled to keep up with dollar demand as
past-due obligations for importers pile up and foreign investors
struggle to repatriate funds.
(Additional reporting and writing by Chijioke Ohuocha; Editing
by Andrew Heavens and Mark Heinrich)