The Central Bank of Nigeria has announced that it has successfully resolved all valid foreign exchange backlogs, effectively removing a historical burden.
This achievement fulfills a promise made by CBN Governor, Mr Olayemi Cardoso, who committed to addressing an accumulated backlog of $7bn in claims.
The announcement was made by the bank’s Acting Director of Corporate Communications, Mrs Sidi Ali, in a statement provided to journalists on Wednesday.
The CBN followed this month by reporting a significant increase in external reserves, rising by $993m to $34.11bn as of March 7, 2024, the highest level in eight months.
The month-on-month increase was driven by a noticeable rise in remittance payments by Nigerians abroad, as well as increased purchases of local assets, including government debt securities, by foreign investors.
Ali emphasized that careful efforts were made to settle these outstanding transactions.
Notably, the CBN recently completed the payment of $1.5bn, resolving obligations to bank customers and thereby clearing the remaining balance of the FX backlog.
The apex bank noted that independent auditors from Deloitte Consulting meticulously assessed each transaction, ensuring that only legitimate claims were honored.
It noted that all invalid transactions were promptly flagged for further scrutiny by relevant authorities.
The statement partly reads, “The Central Bank of Nigeria has announced that all valid foreign exchange backlogs have now been settled, fulfilling a key pledge of the CBN Governor, Mr Olayemi Cardoso, to process an inherited backlog of $7bn in claims.
“Clearance of the foreign exchange transactions backlog is part of the overall strategy detailed in last month’s Monetary Policy Committee meeting to stabilize the exchange rate and thereby curb imported inflation, spurring confidence in the banking system and the economy.
“Cardoso used the MPC meeting and a subsequent conference call with foreign portfolio investors to set expectations for sustained increases in Nigeria’s foreign currency reserves and improved liquidity in the foreign exchange market.”
Cardoso, speaking at a recent meeting, underscored the importance of clearing the FX backlog to restore credibility and confidence in the Nigerian economy.
The resolution of the foreign exchange transactions backlog aligns with the strategy outlined during last month’s Monetary Policy Committee meeting.
The primary goals include stabilizing the exchange rate and mitigating imported inflation. By doing so, the CBN aims to strengthen confidence in the banking system and stimulate economic growth.
Cardoso further communicated these expectations during a conference call with foreign portfolio investors, emphasizing sustained increases in Nigeria’s foreign currency reserves and improved liquidity in the foreign exchange market.
“We needed to go through an independent and credible process that would determine the authenticity of those obligations, and, at this point, I can tell you that we have now cleared all genuine, verifiable transactions. This encumbrance to market confidence in the country’s ability to meet its obligations is now totally behind us,” he added.
The CBN's action shows a significant moment in Nigeria's financial situation, paving the way for a stronger and more stable economy. As the country progresses, the successful clearing of the FX backlog brings confidence to both investors and businesses.
