By Adedapo Adesanya
The Central Bank of Nigeria (CBN) has projected that Nigeria’s external reserves could reduce slightly in 2024 due to debt service, and foreign exchange obligations, among others.
In its released maiden edition of its Macroeconomic Outlook: Price Discovery for Economic Stabilisation report, the central bank said that fulfilling debt obligations would impact the country’s forex savings.
“The external reserves, which stood at $33.09 billion 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,” the report noted.
Recall that the country’s external reserves had crossed the $35 billion mark for the first time in a year earlier this month, reaching $35.05 billion.
As of Thursday, the country’s external reserves stood at $35.77 billion.
Also, the outlook projected a marginal increase to $19.42 billion from $19.17 billion in 2023 for diaspora remittances. This is still below the $20.5 billion recorded in 2022.
“This is on [the] 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.
In terms of public debt, which stands at N121.67 trillion, the report said it was expected to maintain an upward trajectory, but remain on a sustainable path in 2024.
“The expected trajectory of public debt is underscored by planned infrastructural investment, social interventions, and the securitisation of the Ways and Means Advances to the FGN,” the apex bank noted.