Nigeria’s External Reserves May Decline in 2024, Says CBN

Nigeria’s external reserves for the year 2024 may witness a modest reduction, as forecasted recently by the Central Bank of Nigeria (CBN).

This prediction was made evident in the recently published inaugural edition of its ‘Macroeconomic Outlook: Price Discovery for Economic Stabilisation’ report.

The apex bank has attributed this anticipated decline in the country’s reserves to the burden of debt service and other financial 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.”

It is worth noting that on the 8th of July, Nigeria’s foreign reserve reached a milestone, surpassing $35.05 billion for the first time in over a year, a figure that has since remained above this threshold.

As of the 4th of July, the nation’s external reserves had accumulated to $35.77 billion.

Furthermore, the forecast indicates a modest rise in the amount, projected to increase to $19.42 billion from $19.17 billion in the year 2023, concerning diaspora remittances.

“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 was expected to maintain an upward trajectory, but remain on a sustainable path in 2024, saying, “Planned infrastructural investment, social interventions, and the securitisation of the Ways and Means Advances to the FGN underscore the expected trajectory of public debt.”