Recent data from the Central Bank of Nigeria (CBN) has revealed a significant drop of $520.22 million in the country’s external reserves over a five-week period. According to CBN’s records, the reserves, which stood at $33.396 billion as of October 31, 2023, fell to $33.004 billion by December 7, 2023.
This follows an earlier announcement by the CBN, indicating a decline in reserves from $37.07 billion on January 3, 2023, to $33.237 billion as of September 29, 2023. Governor of the CBN, Olayemi Cardoso, expressed concerns about the continuous decline in Nigeria’s crude oil production, exacerbating economic diversification challenges.
Speaking at the Chartered Institute of Bankers of Nigeria’s 58th Annual Bankers’ Dinner and Grand Finale of the Institute’s 60th anniversary in Lagos, Cardoso highlighted the adverse impact on government revenue and foreign exchange inflows. He pointed out that this, coupled with a surge in public expenditures and a deterioration in macroeconomic indicators, constrained policy options, leading to an increase in fiscal deficit and public debt.
Cardoso emphasized the economic challenges facing Nigeria, including high and rising inflation, inadequate foreign exchange supply, depreciation of the exchange rate, limited external reserves, weakened output, and high unemployment. These challenges have resulted in increased interest rates, discouraging investments in productive activities.
In addressing the situation, Cardoso outlined government measures such as the removal of the petrol subsidy and the adoption of a floating exchange rate. He anticipates that these policies, among others, will have positive effects on the economy in the medium term. The expectation is that such measures will enhance investor confidence, attract capital inflows, stimulate domestic investment, and ultimately improve the level of external reserves.
As Nigeria grapples with these economic challenges, the effectiveness of these policies in revitalizing the economy and stabilizing external reserves will be closely monitored, with stakeholders hoping for a turnaround in the coming months.