Settlement boosts economic confidence: CBN clears all $7 billion FX backlog


The Central Bank of Nigeria (CBN) has liquidated all $7 billion accumulated foreign exchange (forex) inherited by Governor Yemi Cardoso.

In an official statement, the Acting Director, Corporate Communications, Central Bank of Nigeria (CBN), Mrs. Hakama Sidi Ali, confirmed the settlement of all valid backlog of foreign exchange claims.

She explained that the CBN has hired Deloitte Consulting, an independent audit firm, to carefully evaluate the transactions and ensure that only legitimate claims are honored.

“Any invalid transactions have been referred to the relevant authorities for further investigation,” Sidi Ali said.

Governor Cardoso stressed the importance of clearing the backlog to restore credibility in the Nigerian economy.

He stated that “we have made addressing the foreign exchange backlog a priority to restore credibility and confidence in the Nigerian economy.”

Cardoso also highlighted the completion of a “credible process” to validate these commitments and expressed his satisfaction with the liquidation of all “genuine, verifiable transactions.”

He stressed the importance of resolving this problem, saying: “This obstacle to the market’s confidence in the country’s ability to meet its obligations is now completely behind us.”

The Central Bank of Nigeria's commitment to tackling the foreign exchange backlog appears to be paying off. External reserves witnessed a significant increase. The Nation newspaper reported that reserves rose to their highest point in nine months last week. This increase is due to a notable rise in remittance payments from Nigerians abroad and increased foreign investment in local assets, including government debt securities.

The Central Bank of Nigeria's actions are part of a broader strategy outlined during the recent meeting of the Monetary Policy Committee (MPC).

This strategy aims to achieve exchange rate stability by maintaining a stable exchange rate that helps curb imported inflation and promotes a more predictable economic environment.

Sidi Ali said that clearing the backlog demonstrates the Central Bank of Nigeria’s commitment to transparency and accountability, which could boost confidence in the financial sector.

Analysts said that increasing foreign exchange reserves and improving liquidity in the foreign exchange market could contribute to economic growth by facilitating international trade and investment.

They noted that Cardoso's efforts to address foreign exchange backlog and strategically manage foreign reserves demonstrate the Central Bank of Nigeria's focus on promoting a more stable and investor-friendly Nigerian economy.