CBN Successfully Clears Foreign Exchange Backlogs, Boosting Economy
By Patience Ikpeme
The Central Bank of Nigeria (CBN) has announced the successful settlement of all valid foreign exchange backlogs, marking a significant milestone in the country’s economy.
This achievement fulfills the pledge made by CBN Governor, Mr. Olayemi Cardoso, to address an inherited backlog of US$7 billion in claims.
In a statement issued on wednnesday, the CBN revealed a surge in external reserves, which increased by $993 million to reach $34.11 billion as of March 7, 2024. This is the highest level recorded in the last eight months.
The driving force behind this month-on-month increase was the substantial rise in remittance payments by Nigerians residing overseas, and increased purchases of local assets, including government debt securities, by foreign investors.
Speaking on behalf of the Central Bank, Mrs. Hakama Sidi Ali, Acting Director of Corporate Communications, announced the completion of a $1.5 billion payment to settle obligations to bank customers, effectively settling the residual balance of the foreign exchange backlog.
She emphasized that independent auditors from Deloitte Consulting had meticulously assessed these transactions to ensure the legitimacy of claims, with any invalid transactions promptly referred to relevant authorities for further scrutiny.
CBN Governor Cardoso had reiterated the importance of clearing the foreign exchange backlog during a recent meeting, stating, “We made clearing the FX backlog a priority to restore credibility and confidence in the Nigerian economy.”
He further emphasized the need for an independent and credible process to determine the authenticity of these obligations and stated that all genuine, verifiable transactions have been successfully cleared. This development is expected to boost market confidence in Nigeria’s ability to meet its obligations.
Clearing the foreign exchange transactions backlog is an integral part of the comprehensive strategy discussed during the previous month’s Monetary Policy Committee meeting. The aim is to stabilize the exchange rate and mitigate imported inflation, instilling confidence in both the banking system and the overall economy. Cardoso utilized the MPC meeting and subsequent conference calls with foreign portfolio investors to outline the expectations of sustained increases in Nigeria’s foreign currency reserves and improved liquidity in the foreign exchange market.
These positive developments signify a significant step towards strengthening Nigeria’s economy and reaffirming the Central Bank’s commitment to sound financial practices. With the successful resolution of the foreign exchange backlog, the country can now focus on fostering economic growth and attracting foreign investments, creating a favorable environment for businesses and investors alike.
