By Milcah Tanimu
Nigeria’s external reserves might experience a slight decrease in 2024, according to the Central Bank of Nigeria (CBN). This forecast was detailed in the CBN’s inaugural edition of its report titled ‘Macroeconomic Outlook: Price Discovery for Economic Stabilisation.’
The CBN attributes the potential decline to ongoing debt servicing and other financial obligations. The report notes that while external reserves stood at $33.09 billion in 2023, they could decrease slightly in 2024 due to continued payments of foreign exchange forward obligations, matured swaps, and debt service. However, the anticipated improvement in crude oil earnings, along with reforms in the foreign exchange market and energy sector, is expected to mitigate the impact on the reserves.
Despite the projected decline, Nigeria’s foreign reserve surpassed $35.05 billion on July 8, marking the first time it has reached this level in over a year, with a subsequent accumulation to $35.77 billion as of July 4.
The forecast also predicts a modest increase in diaspora remittances, projected to rise to $19.42 billion from $19.17 billion in 2023. This increase is attributed to expected improvements in global economic conditions and foreign exchange market reforms, which allow international money transfer operators to pay beneficiaries at market-determined exchange rates. The CBN’s efforts to enhance efficiency, transparency, and confidence in the foreign exchange market are also expected to boost remittances through formal channels.
Regarding public debt, the report indicates that it is expected to continue on an upward trajectory but remain sustainable in 2024. This outlook is supported by planned infrastructural investments, social interventions, and the securitization of the Ways and Means Advances to the Federal Government of Nigeria.
