The Central Bank of Nigeria (CBN) says the country’s foreign exchange reserves are at risk due to the petrol subsidy removal, lower crude oil earnings, increased external debt servicing obligations and rising import bills.
CBN disclosed this in its Monetary, Credit, Foreign Trade and Exchange Policy guidelines for fiscal years 2024/2025 released on Tuesday, September 17.
However, the apex bank projected an overall positive economic growth for the period based on continued policy support to the agriculture and oil sectors, reforms in the foreign exchange market, and the effective implementation of the Finance Act 2023 and the 2022-2025 Medium-Term National Development Plan (MTNDP).
According to the apex bank, “The outlook for Nigeria’s external sector in 2024/2025 is optimistic, with expectations of favorable terms of trade due to a sustained rally in crude oil prices and an improvement in domestic crude oil production.
The positive outlook is supported by the continued high crude oil prices, driven by production cuts, as well as gains from capital flows and remittances.
However, lower crude oil earnings, the removal of fuel subsidies, rising import bills, and increased external debt servicing obligations could pose downside risks to the accumulation of external reserves. [SWIPE]
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