The Central Bank of Nigeria has revealed that lower crude oil earnings, fuel subsidy removal, lower import bills and increased external debt servicing obligations are potent dangers for the country’s external reserves growth by the 2024/2025 fiscal year.
The apex bank disclosed this in its Monetary, Credit, Foreign Trade and Exchange Policy guidelines for fiscal years 2024/2025.
According to CBN, lower crude oil earnings, fuel subsidy removal, lower import bills and increased external debt servicing obligations are major determinants of the overall economic growth of Nigeria.
CBN, however, projected that Nigeria’s external sector in 2024/2025 is optimistic, on the expectation of favorable terms of trade, occasioned by sustained rallies in crude oil prices and an improvement in domestic crude oil production.
“The positive outlook is supported by the sustenance of crude oil price, propelled by the decision to cut production, and gains from capital flows and remittances.
“However, lower crude oil earnings, fuel subsidy removal, rising import bills, and increased external debt servicing obligations could pose downside risks for the accretion to external reserves.
“In addition, the sustained monetary policy tightening by central banks across advanced economies increases the risk of capital outflow,” it said.
This, the CBN said, would retain Ways and Means to the Federal Government at 5 percent in the period under review.
Nigeria’s external reserves stood at $36.865 billion as of September 12, 2024, according to CBN data.
CBN reveals three dangers to Nigeria’s External Reserves
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