Cleared FX Backlog: CBN reports increase in external reserves, March

Following the announcement of clearing all foreign exchange backlog, the Central Bank of Nigeria (CBN)  also reported a significant increase in external reserves from $993 million to $34.11 billion as of March 7, 2024, the highest level in eight months.

This was disclosed by the Bank’s Acting Director of Corporate Communications, Mrs Hakama Sidi Ali, in Abuja on Wednesday.

According to the CBN, the month-on-month increase was driven by a marked advance in remittance payments by Nigerians overseas, as well as higher purchases of local assets, including government debt securities, by foreign investors.

The Central Bank of Nigeria (CBN) has also announced that all valid foreign exchange backlogs have now been settled, fulfilling a key pledge of the CBN Governor, Olayemi Cardoso, to process an inherited backlog of US$7 billion in claims.

She noted that the CBN recently concluded the payment of $1.5 billion to settle obligations to bank customers, effectively settling the residual balance of the FX backlog.

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She also disclosed that independent auditors from Deloitte Consulting meticulously assessed these transactions, ensuring that only legitimate claims were honoured. Any invalid transactions were promptly referred to the relevant authorities for further scrutiny.

At a recent meeting, Governor Cardoso declared: “We made clearing the FX backlog a priority to restore credibility and confidence in the Nigerian economy.

“It was important that we go through an independent and credible process that would determine the authenticity of those obligations, and, at this point, I can tell you that we have now cleared all genuine, verifiable transactions. This encumbrance to market confidence in the country’s ability to meet its obligations is now totally behind us.”

Clearance of the foreign exchange transactions backlog is part of the overall strategy detailed in last month’s Monetary Policy Committee meeting to stabilise the exchange rate and thereby curb imported inflation, spurring confidence in the banking system and the economy.

Cardoso used the MPC meeting and a subsequent conference call with foreign portfolio investors to set expectations for sustained increases in Nigeria’s foreign currency reserves and improved liquidity in the foreign exchange market.