Over the course of five weeks, the country’s foreign reserves have significantly decreased by $520.22 million, according to the Central Bank of Nigeria (CBN).
As of September 29, 2023, the reserves have decreased to $33.237 billion from $37.07 billion on January 3, 2023, according to data supplied by the CBN.
In her remarks at the 58th Annual Bankers’ Dinner and Grand Finale of the Chartered Institute of Bankers of Nigeria’s 60th anniversary in Lagos, Governor Olayemi Cardoso emphasised the effect of decreasing crude oil production on Nigeria’s economic diversification.
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He voiced concerns on the decline in foreign exchange inflows and government revenue occurring at the same time that public spending is increasing and macroeconomic indicators are getting worse.
Cardoso stated, “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.”
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He went on to say that because of these difficulties, lending rates have gone up, which has discouraged investment in profitable ventures.
The governor of the CBN stated that the banking system’s solvency ratios and asset quality have been impacted by excessive inflation.
”Additionally, the persistent depreciation of the naira poses a significant risk for domestic banks with foreign exchange exposures.
“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.
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“These measures are expected to enhance investor confidence, attract capital inflows, stimulate domestic investment, and ultimately improve the level of external reserves,” Cardoso disclosed.
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