According to information received from the Central Bank of Nigeria, the country’s external reserves declined by $520.22 in five weeks.
According to CBN data on reserve movement, the sum of $33.396 billion as of October 31, 2023 declined to $33.004 billion as of December 7, 2023.
The CBN previously stated that the reserves that began on January 3, 2023, at $37.07 billion, have fallen to $33.237 billion as of September 29, 2023.
The Governor of the Central Bank of Nigeria, Olayemi Cardoso, stated recently at the Chartered Institute of Bankers of Nigeria’s 58th Annual Bankers’ Dinner and Grand Finale of the Institute’s 60th Anniversary in Lagos, that the continuous decline in Nigeria’s crude oil production had further weakened the country’s already inadequate economic diversification.
He said,
“This has led to a decline in government revenue and foreign exchange inflows, while simultaneously witnessing a growth in public expenditures and a deterioration in macroeconomic indicators, which has constrained our policy options. Consequently, we have seen the fiscal deficit and public debt increase, placing additional strain on external reserves and contributing to exchange rate instability.”
A thorough assessment of the economy revealed significant challenges, including high and rising inflation, inadequate foreign exchange supply, depreciation of the exchange rate, limited external reserves, weakened output, and high unemployment, he said.
These challenges, he added, had led to increased interest rates, discouraging investments in productive activities.
Within the banking system, he said, high inflation had affected asset quality and solvency ratios.
Additionally, the persistent depreciation of the naira poses a significant risk for domestic banks with foreign exchange exposures, Cardoso said.
However, he added,
“The removal of petrol subsidy and the adoption of a floating exchange rate, among other government policies, are anticipated to have positive effects on the economy in the medium-term.
“These measures are expected to enhance investor confidence, attract capital inflows, stimulate domestic investment, and ultimately improve the level of external reserves.”