By; AMOS TAUNA, Kaduna
The International Monetary Fund (IMF), has anticipated a challenging period through 2024 to 2025 for Nigeria’s financial account.
The IMF exacerbation is based on an absence of new Eurobond issuances, significant repayments of existing funds and Eurobonds totalling $3.5 billion, and continued portfolio outflows.
According to the IMF, Nigeria is currently facing significant challenges with foreign exchange illiquidity, impacting the country’s ability to clear its forex backlog and further depreciating the country’s currency’s value.
The international financial institution’s projections stated that as of February 8, 2024, data from the Central Bank of Nigeria (CBN) put the country’s foreign reserves at $33.12 billion, indicating a substantial drop is on the horizon.
According to IMF, the first half of 2023 witnessed a surplus in the current account, yet there was a notable decline in reserves, saying that the downturn has been attributed to a decrease in hydrocarbon exports, largely due to rampant theft and a lack of investment in essential upstream infrastructure.
Additionally, it further explained that the profit repatriation from the oil sector has seen a downturn, albeit slightly offsetting the adverse effects on the current account, reiterating that the Nigeria’s financial account likely to deteriorate 2024-25.
Despite projecting a current account surplus, the IMF said that 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 forecast to pick up once again.
