Emmanuel OchayiThe Central Bank of Nigeria (CBN) disclosed a $520.22 million reduction in the country’s external reserves within five weeks, plummeting from $33.396 billion as of October 31, 2023, to $33.004 billion by December 7, 2023.
During the Chartered Institute of Bankers of Nigeria’s 58th Annual Bankers’ Dinner in Lagos, Governor Olayemi Cardoso highlighted the decline in Nigeria’s crude oil production as a contributing factor.
He emphasized, “The continuous decline in Nigeria’s crude oil production has further weakened economic diversification, leading to a decline in government revenue and foreign exchange inflows.”
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Cardoso also pointed out various challenges plaguing the economy, including high inflation, inadequate foreign exchange supply, depreciation of the exchange rate, limited external reserves, weakened output, and soaring unemployment.
Acknowledging the adverse effects on the banking system, Cardoso noted that high inflation has negatively impacted asset quality and solvency ratios within the industry. Furthermore, the consistent depreciation of the naira poses a substantial risk to domestic banks with foreign exchange exposures.
In response to these challenges, the CBN Governor expressed optimism about the government’s measures, such as the removal of petrol subsidy and the adoption of a floating exchange rate. He anticipates these policies to bolster investor confidence, attract capital inflows, stimulate domestic investment, and ultimately improve the level of external reserves in the medium term.
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