The Central Bank of Nigeria (CBN) has projected a reduction in Nigeria’s external reserves before the end of 2024.
This was contained in the recently released maiden edition of its ‘Macroeconomic Outlook: Price Discovery for Economic Stabilisation’ report.
The apex bank attributed the projected deep in the country’s reserves to debt service and other obligations.
The outlook said, “The external reserves, which stood at $33.09bn in 2023 could reduce slightly in 2024. This is on the assumption of continued payments of outstanding foreign exchange forward obligations, matured foreign exchange swaps, and debt service. The expected improvement in crude oil earnings, together with recent reforms in the foreign exchange market and energy sector, however, would cushion the drop in external reserves.”
On July 8, Nigeria’s foreign reserves crossed $35.05 billion, marking the first time in about a year and have remained above that level since then. As of Thursday, the country’s external reserves stood at $35.77 billion.
Additionally, the outlook for diaspora remittances projected a marginal increase to $19.42 billion from $19.17 billion in 2023.
“This is on account of the expected improvement in global economic conditions and reforms in the foreign exchange market that allow international money transfer operators to pay beneficiaries at market-determined exchange rates. Similarly, the ongoing efforts by the Bank to improve efficiency, transparency and confidence in the foreign exchange market is expected to boost remittances through formal channels,” the outlook said.
On public debt, the report stated that it is expected to maintain an upward trajectory but remain on a sustainable path in 2024. This projection is driven by planned infrastructural investments, social interventions, and the securitization of the Ways and Means Advances to the Federal Government of Nigeria (FGN).
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