Nigeria’s financial account likely to deteriorate in 2024-25 – IMF

The International Monetary Fund (IMF) anticipates a challenging period through 2024–25 for Nigeria’s financial account, exacerbated by an absence of new Eurobond issuances, significant repayments of existing funds and Eurobonds totalling $3.5 billion, and continued portfolio outflows.

Despite projecting a current account surplus, the officially reported reserves are expected to diminish to $24 billion in 2024, with a hopeful recovery to $38 billion by 2028 as portfolio inflows are forecasted to pick up once again.

The report read: “Through 2024–25, the financial account is likely to deteriorate, with no projected issuance of Eurobonds, large Fund and Eurobond repayments of $3.5 billion, and portfolio outflows.

“Hence, despite a current account surplus, officially reported reserves are projected to decline to $24 billion in 2024 before increasing again to $38 billion in 2028 as portfolio inflows resume.”

According to the IMF, the CBN reported that the 30-day average of gross international reserves (GIR) had dwindled to $33 billion by October 2023, marking a decrease of nearly $4 billion from the end of 2022. This level of reserves provides for six months of import cover and meets 83 per cent of the IMF’s Assessing Reserve Adequacy (ARA) metric.

However, when adhering to the IMF’s definition of GIR, which considers $8 billion in securities as pledged collateral and not readily accessible, the GIR adjusts to a lower figure of $25 billion at the end of October 2023.

The IMF also claimed that the Nigerian authorities have yet to disclose comprehensive information on short-term foreign exchange liabilities, which are crucial for calculating the net international reserves accurately.

UNI Agric Markurdi
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