The country’s external reserves fell by $520.22 in five weeks, figures obtained from the Central Bank of Nigeria revealed.

According to CBN’s data on movement in reserves, the figures which stood at $33.396bn as of October 31, 2023 fell to $33.004bn as of December 7, 2023.

The CBN had earlier revealed that the reserves which commenced January 3, 2023, at $37.07bn fell to $33.237bn as of September 29, 2023.

Speaking 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, the Governor, CBN, Olayemi Cardoso, said, in recent years, the continuous decline in Nigeria’s crude oil production had further weakened the 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.”

Punch