ALL valid FX backlog cleared, says CBN

The Central Bank of Nigeria (CBN) says it has successfully settled all outstanding foreign exchange (FX) obligations.

Hakama Sidi Ali, acting director of corporate communications at CBN, disclosed this in a statement on Wednesday.

Ali said the financial regulator recently concluded the payment of $1.5 billion to settle obligations to bank customers, effectively settling the residual balance of the FX backlog.

On February 5, Olayemi Cardoso, CBN governor, said he inherited a $7 billion FX backlog when he became the head of the apex bank in September 2023, however, it has dropped to $2.2 billion.

Commenting further on the backlog settlement, Ali disclosed that “independent auditors from Deloitte Consulting meticulously assessed these transactions, ensuring that only legitimate claims were honoured”.

She said any invalid transactions were promptly referred to the relevant authorities for further scrutiny.

“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,” Ali said.

“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.”

According to the spokesperson, at a recent meeting, Cardoso said CBN made clearing the FX backlog a priority to restore credibility and confidence in the Nigerian economy.

“It was important that we 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,” he said.

“This encumbrance to market confidence in the country’s ability to meet its obligations is now totally behind us.”

On January 29, CBN said $500 million had been released to various sectors to address the backlog of verified FX transactions.

Prior to this, the apex bank said $61.64 million was disbursed to foreign airlines through various banks.

EXTERNAL RESERVES UP BY $993 MILLION

Ali said CBN recorded a significant increase in external reserves.

“The CBN followed this month by reporting a significant increase in external reserves, rising by $993 million to $34.11 billion as of March 7, 2024, the highest level in eight months,” she said.

“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.”