At $35.93bn, Nigeria’s foreign reserves hit record high since 2023
The Central Bank of Nigeria (CBN) has disclosed that Nigeria foreign reserves reached record high of $35.93 billion as of June 18, 2024.
Foreign reserves, also known as foreign exchange reserves, are assets held by a country’s central bank in foreign currencies. These reserves are used to back liabilities and influence monetary policy. For Nigeria, the CBN manages the country’s foreign reserves.
The $35.93 billion as of June 19, 2024 is the highest since February 2023 when Nigeria’s foreign exchange buffer crossed the $36 billion mark.
WESTERN POST can report that the foreign reserves so far in 2024 have gained $3.02 billion from $32.91 billion it closed 2023.
According to analysts at Cordros Research, Nigeria’s foreign exchange reserves hit its highest level in 16 months, as the gross reserve level increased by $557.70 million week-on-week to $35.93 billion, attributable to the disbursement of first tranche ($750.00 million) of the Development Policy Financing from the World bank.
The Federal Government stated that it obtained $751.88million out of the recently approved $1.5billion loan by the World Bank.
The loan under the Nigeria Reforms for Economic Stabilisation to Enable Transformation, Development Policy Financing Programme project was disbursed on June 28, 2024.
This loan project is a part of the broader $2.25billionn approved by the World Bank for Nigeria on June 13, 2024, to bolster Nigeria’s economic stability and support its vulnerable populations.
The $1.5billion loan comprises two separate agreements between Nigeria and the World Bank: An International Development Association credit of $750million, and an International Bank for Reconstruction and Development loan of $750million.
The amount disbursed includes the entire $750million from the IDA loan and $1.88million from the IBRD of the World Bank, with an undisbursed balance of $748.13million.
It also had fee charges of $1.88million.
The proposed DPF for Nigeria consists of a standalone operation with two tranches designed to support significant reforms in alignment with the government’s economic stabilisation and recovery priorities.
This operation is structured around four key results distributed across two pillars, which include increasing fiscal oil revenues from 1.8 per cent of Gross Domestic Product in 2022 to 2.7 per cent by 2025, boosting non-oil fiscal revenues from 5.3 per cent to 7.3 per cent over the same period, expanding social safety nets to assist 67 million vulnerable Nigerians, and raising the import value of previously banned products from $11.3million to $54.6million by 2025.
Recent developments that drives significant increase in foreign reserves
Being an oil-dependent economy, Nigeria’s reserves are significantly impacted by the global oil market. High oil prices typically boost reserves, while low prices can deplete them.
As of June 19, crude oil price stood at $88.10 per barrel from $ 79.4 per barrel it closed 2023.
Besides, the Nigerian National Petroleum Company Limited (NNPCL) in February handed over a ‘significant’ portion of its revenue to the CBN
NNPCL explained that it was in alignment with the directives of its board of directors to maintain ‘safe obligor limits’ with commercial banks.
Also, the CBN employs various measures, such as monetary policy adjustments and interventions in the foreign exchange market, to manage reserve levels and efforts are made by the present administration to diversify the economy and reduce reliance on oil, which can help stabilize foreign reserves in the long run.
The Monetary Committee Policy of CBN noted the increase in the foreign reserve balance between March and April 2024 and urged the Bank to sustain its focus on accretion to reserves.
