The Deputy Governor in charge of Economic policy at the Central Bank of Nigeria (CBN), Muhammad Sani Abdullahi has projected Nigeria’s external reserve to increase from around $34.98 billion to over $35 billion by the end of March 2024.
He further stated that the nation’s FX reserve could finance 10 months of imports of goods only and about seven months of goods and services.
Recommended reading: Nigeria’s foreign reserve to drop to $24 billion in 2024 – IMF
The apex bank’s Deputy Governor based his projection on the import statistics of third quarter foreign trade report were Nigeria recorded import amounting to N8.46 trillion from a total external trade of N18.8 trillion.
According to Mr. Sani Abdullahi, the projected increase in the nation’s FX reserve in based on recent reforms in the FX market and improvements in crude oil production.
- He stated, “The external reserves stood at US$34.98 billion as of March 14, 2024, from US$33.74 billion in the previous month. The level of reserves could finance 7.0 months of import for goods and services, and 10.0 months of import for goods only based on import statistics for Q3 2023.
- “External reserves is projected to increase marginally to US$35,014.28 million at end-March 2024, from US$34,984.00 million as of March 14, 2024.”
More insights
Nigeria’s external reserve has seen an increase in the past few months occasioned by elevated crude oil prices and the impact of the reforms of the new apex bank leadership. Since the beginning of the year, average crude oil prices have stood above the budget benchmark price for 2024. Also, crude oil production has increased significantly from the figures recorded in 2022 and early 2023 to around 1.4 million bpd.
The projected increase in FX reserve to $35.01 billion is close to the figures recorded around April 2023 when FX reserve stood at $35.7 billion. This figure rapidly dropped to about $32.87 billion in December– a six year low.
However, a slew of reforms introduced by the apex bank including introduction of 50% cap on the amount of oil proceeds International Oil Companies (IOCs) can immediately remit back to their parent company abroad have helped to shore up the external reserve.
