CBN Clears FX Backlog, Reserves Up by $993M

The Central Bank of Nigeria (CBN) has declared the successful resolution of the legitimate foreign exchange backlog. 

This noteworthy accomplishment was announced by Mrs. Hakama Sidi Ali, the Acting Director of Corporate Communications at the Bank. 

She emphasized that this achievement fulfils a commitment made by CBN Governor, Mr. Olayemi Cardoso, to address a previously inherited $7 billion backlog in claims.

In a statement on Wednesday in Abuja, Mrs. Ali disclosed that the CBN has completed payments totaling $1.5 billion, effectively clearing the remaining portions of the FX backlog. 

“She noted that the CBN recently concluded the payment of $1.5 billion to settle obligations to bank customers, effectively settling the residual balance of the FX backlog. 

“She also disclosed that independent auditors from Deloitte Consulting meticulously assessed these transactions, ensuring that only legitimate claims were honoured.

“Any invalid transactions were promptly referred to the relevant authorities for further scrutiny.” 

Independent auditors from Deloitte Consulting were tasked with closely examining these transactions to ensure that only legitimate claims were settled.

Any suspicious transactions were promptly flagged for further investigation by the relevant authorities.

Additionally, the CBN reported a significant increase in Nigeria’s external reserves, which surged by $993 million to reach $34.11 billion as of March 7, 2024, marking an eight-month high.

This increase was attributed to higher remittance payments from Nigerians living abroad and increased interest from foreign investors in local assets, including government debt securities.

As part of its strategy outlined in the recent Monetary Policy Committee meeting, the clearance of the foreign exchange backlog aims to stabilize the exchange rate and mitigate imported inflation, thereby boosting confidence in the banking system and the economy.

Furthermore, CBN Governor Yemi Cardoso disclosed in February that approximately $2.4 billion of the foreign exchange backlog was deemed invalid for settlement. 

Recent efforts by the CBN to stabilize the naira have yielded positive results, with parallel market operators quoting a buy price of N1400/$1 for holders of dollars looking to sell, indicating a significant strengthening of the naira.

Meanwhile, the exchange rate on the official market fell to N1,400/$1 on Wednesday, the strongest performance since March 4th.

Cardoso clarified that out of the initial $7 billion FX liabilities of the federal government, about $2.4 billion were identified as invalid following a forensic audit by Deloitte Management Consultant.

The audit revealed various infractions, including non-existent entities and unauthorized FX allocations, rendering these liabilities invalid.

Cardoso had stated around three weeks ago that the remaining FX backlogs would be cleared within the next few days, which aligns with the recent clearance of about $400 million of valid FX backlog by the bank.