The Central Bank of Nigeria has declared that it has successfully resolved all valid foreign exchange backlogs, thereby reducing a legacy burden.
This accomplishment fulfils CBN Governor Mr Olayemi Cardoso’s promise to address an inherited $7 billion claims backlog.
Mrs Sidi Ali, the bank’s Acting Director of Corporate Communications, made the announcement in a statement released to press on Wednesday.
The CBN followed up this month by announcing a large gain in external reserves, which rose by $993 million to $34.11 billion as of March 7, 2024, the highest level in eight months.
The month-on-month increase was driven by a marked advance in remittance payments by Nigerians overseas, as well as higher purchases of local assets, including government debt securities, by foreign investors.
Ali emphasized that meticulous efforts were undertaken to settle these outstanding transactions.
Notably, the CBN recently completed the payment of $1.5bn, resolving obligations to bank customers and thereby clearing the residual 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 honoured.
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 stabilise 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 clearance of the foreign exchange transactions backlog aligns with the strategy outlined during last month’s Monetary Policy Committee meeting.
The primary objectives include stabilising the exchange rate and mitigating imported inflation. By doing so, the CBN aims to bolster 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.
This action by the CBN signifies a moment in Nigeria’s financial landscape, paving the way for a more resilient and stable economy. As the nation moves forward, the successful clearance of the FX backlog serves as a beacon of confidence for investors and businesses alike.