CBN: Nigeria’s $42.01bn External Reserves Can Finance Goods, Services Importation for Nine Months

.Senate asks CBN to address interest rate hikes, naira scarcity

Sunday Aborisade in Abuja

The Central Bank of Nigeria said Wednesday that the $42.01billion external reserves of the country can finance importation of goods and services for more than nine months in 2025.

This is as the apex bank, assured Nigerians of better economic fortunes in 2025.

The Governor of the CBN, Mr Olayemi Cardoso stated this during performance index report presentation to the Senate Committee on Banking, Insurance and other Financial Institutions.

“The CBN Governor said, “External Reserves rose from $38.35bilion it was on September 30, 2024, to $42.01billion as of December 12, 2024.

He explained that the increase in external reserves within the stated period, was driven largely by receipts from crude oil related taxes and third party receipts in Q3 2024.

He said, “We maintained a current account surplus and saw remarkable improvements in our trade balance .

“Our external reserves level can finance over 9.09months of import of goods and services or 13.91 months only, higher than the international benchmark of 3.0 months and a robust buffer against shocks.”

On cash shortage, the CBN boss, reiterated application of new policy of N150million fine against any branch of Banks caught indulging in illegal distribution of new naira notes to currency hawkers and unscrupulous elements.

He added that the Nigeria economy will take a better shape in 2025 fiscal year , through policies and measures that had been put on ground .

Cardoso said, “Distinguished Senators , as we conclude this briefing, I want to highlight that despite the challenges facing our economy, there are clear reasons for optimism.

“The gradual stabilization of the forex market , ongoing banking sector recapitalization, positive growth trends in key sectors, especially the services sector indicate a path toward recovery and stability,” he said.

He explained that diaspora remittances through the International Money Transfer Operators (IMTOs) totalled $4.22 billion from January to October 2024, almost doubling the $2.62 billion recorded in the corresponding period in 2023.

The increase in remittances represents a growth of approximately 61.1% in one year.

Providing a monthly breakdown, Cardoso noted that remittances rose from $336.61 million in September 2024 to $402.38 million in October 2024.

The CBN Governor attributed the increase to enhanced efficiency in the remittance process, the positive impact of President Bola Tinubu’s policies, and the growing confidence of Nigerians in the diaspora to contribute to national development.

Cardoso further projected that remittance inflows would continue to rise by the end of the year, given the current trajectory.

The Senate Committee on Banking, Insurance and other Financial Institutions on the occasion, urged the CBN to address its interest rate hikes.

It warned that economic productivity cannot be enhanced in a high interest rate environment where access to credit is equally constrained.

The Chairman of the Senate Committee, Mukhail Abiru, gave the advise during the interactive session with the CBN delegation.

Abiru said, “It goes without saying, therefore, that productivity cannot be enhanced in a very high interest rate environment where access to credit is equally constrained.

“This is why we think the bank should devote more time to assess the impact of sustained rate hikes not only on the general price level but also on the overall economic activity.”

Further expressing comcerns over risisng inflation, the chairman urged the apex bank to consider deploying monetary policy tools to support productivity noting that traditional tools for maintaining inflation are weakened by huge cash circulating outside the banks.

“This is without prejudice to the banks’ primary mandate of maintaining price stability and its instrument of independence,” he said.

Abiru highlighted the role of increased output, especially in the agricultural sector, in moderating inflationary pressures dominated by the food index.

To further support productivity, he recommended that the bank should consider resuming targeted interventions to SMEs through developing financial institutions, and other mechanisms, as part of efforts to achieve the $1 trillion of economy.

He further emphasised the importance of synchronising monetary and fiscal policies to achieve desired macroeconomic goals.

The chairman also raised concerns around the persistent cash scarcity in recent times despite assurances by CBN to address the challenge.

He criticised the difficulty in accessing cash from ATMs, including those located within the bank premises, as well as the prevalence of dirty and mutilated Naira notes in circulation.

Additionally, he condemned excessive bank charges, delays in resolving customer complaints, and the high rate of failed online transactions, all of which, he noted, undermine public confidence in the banking system.

Abiru further urged the apex bank to clear the outstanding $2.4bn foreign exchange (FX) forward contract noting that the Senate has recieved petitions from, small, medium, and large enterprises.