Boost for Naira as CBN Successfully Pays Additional $400 Million to Foreign Airlines, Others

Boost for Naira as CBN Successfully Pays Additional $400 Million to Foreign Airlines, Others

  • The Central Bank of Nigeria has said it paid an additional $400 million in foreign exchange backlog
  • The move comes as the bank increased the country's MPR rate by 400 basis points to 22.77% from 18.75%
  • The payment of the forex backlog will boost the naira’s performance against the dollar and increase confidence in the economy’s Pascal Oparada has reported Tech, Energy, Stocks, Investment and the Economy for over a decade.

The Central Bank of Nigeria confirmed on Tuesday, February 27, 2024, that it cleared an additional $400 million FX backlog of verified and genuine forward requests.

The CBN governor, Olayemi Cardoso, disclosed this after the two-day Monetary Policy Committee meeting, which increased the country’s Monetary Policy Rate (MPR) by 400 basis points to 22.77% from 18.75% in July last year.

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Cardoso confirms addition FX backlog payments, CBN
Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, says Nigeria's external reserves have increased Credit: CBN
Source: UGC

Nigeria's external reserves rise

Cardoso also said Nigeria’s external reserves rose to $34 billion against the $33 billion in January 2024.

He said:

“We are committed to clearing the FX backlog of identified and genuine pending requests. We paid $400 million FX backlogs that are so identified. We will continue to do so in one form or the other,” Cardoso said during a press briefing on the outcome of the MPC.

BusinessDay reports that on February 5, 2024, the CBN said it had reduced the $7 billion FX backlog it inherited to $2.2 billion and vowed it was working to clear the outstanding balance.

Experts have blamed the backlog for the naira’s woes in the Forex market, which erodes investors' confidence in the Nigerian economy.

CBN pays 14 banks to settle debtors

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Recall that the apex bank had said that it cleared the entire foreign exchange forwards liability of 14 banks.

A CBN official disclosed that settlements with foreign airlines have also begun. Nigeria has about $7 billion in mature FX forwards.

Analysts say this is a significant worry for investors as foreign currency shortages continue to cause the naira to depreciate despite assurances by the apex bank to clear the backlogs.

More foreign debtors get paid

Reuters reports that about $2 billion of the backlog across sectors such as manufacturing, aviation, and petroleum has been settled, per a statement from Acting CBN spokesman Hakama Sidi Ali. reports that Ali said an independent forensic review of the backlog authorised by CBN revealed serious infractions, abuse, and significant non-compliance with the market regulations.

Ali said the CBN will enforce appropriate sanctions against offenders in partnership with relevant security agencies.

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The financial institutions regulator said it is committed to cleaning up the financial services industry to enhance market confidence.

Also, the bank said more foreign airlines have been paid, leading to IATA saying the apex bank owes its members more than it claims.

FG confirms $600 million still owed to foreign airlines previously reported that the minister of Aviation and Aerospace, Festus Keyamo, had clarified the issue of trapped funds belonging to foreign airlines.

The minister said about $600 million was still held up in commercial banks, which he said differed from the Central Bank of Nigeria's (CBN) direct obligations.

Keyamo stated that the original debt to foreign airlines was about $700 million, of which the apex bank has successfully cleared about $136.73 million, with the remaining balance concerning transactions foreign airlines conducted with commercial banks.


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