Foreign reserve drops by $2.85bn in H1 of 2023
By Patience Ikpeme
Figures from the Central Bank of Nigeria have shown that Nigeria’s external reserves dropped by $2.85bn in the first half of 2023, largely due to external debt financing and other challenges.
The reserves, which started at $37.07billion on 3 January 2023, were reduced to $34.22billion by 26 June 2023.
This follows a decline of $3.43billion in 2022, with the reserves standing at $40.52billion at the end of December 2021 and dropping to $37.09billion by 29 December 2022.
The decrease in reserves has been attributed to declining crude oil prices and uncertainties in the global market.
The country’s limited capacity to generate foreign exchange from both oil and non-oil exports has also contributed to the weak position of the external reserves.
However, analysts have also highlighted other factors contributing to the reduction in reserves to include government borrowing to finance the deficit in the 2022 budget.
They suggest that addressing oil theft, increasing local refining capacity and ending the petrol subsidy regime could have a positive impact on the foreign exchange market and exchange rate.
