Nigeria has made notable strides in managing its foreign financial obligations, according to the latest report from the Central Bank of Nigeria (CBN). The report highlights a significant increase in international payments, which include foreign debt servicing, letters of credit, and payments for goods and services.
The CBN has revealed that Nigeria’s international payments increased by $3.31 billion in the first five months of 2024. This represents a 30.8% rise compared to the $2.53 billion recorded in the same period in 2023. This boost in payments was largely driven by a 96.3% increase in foreign debt servicing, which now accounts for $2.19 billion, or 66.1% of the total costs.
President Bola Tinubu and CBN Governor Olayemi Cardoso are credited with overseeing these improvements amid a challenging economic landscape. The rise in payments is seen as part of the government’s efforts to meet its international financial obligations and maintain economic stability.
In addition to foreign debt servicing, there has been a significant increase in direct remittances from Nigerians abroad. These remittances rose by 28.5% year-on-year to $841.37 million, reflecting a growing demand for international services among Nigerians.
Despite this positive trend, payments for letters of credit have declined by 63.3% on a quarterly basis, dropping to $279.99 million from $762.03 million in the same period last year.
The report also notes improvements in Nigeria’s foreign exchange (FX) reserves and the naira’s exchange rate. Nigeria’s FX reserves grew by $12.06 million weekly, reaching $36.85 billion. This increase in reserves contributed to a 2.7% appreciation of the naira, which is now valued at N1,574.20 per dollar in the official market.
The rise in the naira’s value is attributed to the CBN’s Retail Dutch Auction System (rDAS), which has supported the naira’s strength against the dollar. However, data from the FMDQ Exchange indicates a 58.7% decrease in total turnover in the Forex market, with trades occurring within the N1,520 to N1,628 range.
Nigeria’s successful management of foreign debts is evident in its repayment history. The CBN’s data shows that from January to October 2023, Nigeria paid $3.07 billion in foreign debt servicing. This amount is a 38.31% increase over the $2.22 billion spent during the same period in 2022. Notably, the government allocated $112.35 million in January, $288.54 million in February, and $400.47 million in March for debt servicing.
Overall, these developments underscore Nigeria’s efforts to stabilize its economy by effectively managing its foreign financial obligations and improving its economic indicators. The government’s focus on repaying international debts and increasing remittances is seen as a strategic move to enhance economic stability and growth.
