The International Monetary Fund, IMF has said Nigeria’s foreign reserves may see a record fall to $24 billion in 2024.
The Washington-based Fund revealed this in its latest country report for Nigeria, indicating a significant drop and potential forex challenges for Africa’s largest economy.
Nigeria’s external reserves stood at $33.12 billion as of February 8.
In its report, the IMF forecasts a challenging period through 2024 to 2025 for the country’s financial account, exacerbated by an absence of new Eurobond issuances, significant repayments of existing funds and Eurobonds totalling $3.5 billion, and continued portfolio outflows.
Despite projecting a current account surplus, the reported reserves were expected to diminish to $24 billion in 2024, with a hopeful recovery to $38bn by 2028 as portfolio inflows were forecasted to pick up once again.
Through 2024–25, the financial account is likely to deteriorate, with no projected issuance of Eurobonds, large Fund and Eurobond repayments of $3.5bn, and portfolio outflows.
Hence, despite a current account surplus, officially reported reserves are projected to decline to $24bn in 2024 before increasing again to $38 billion in 2028 as portfolio inflows resume.
The IMF noted that the first half of 2023 witnessed a surplus in the current account, yet there was a notable decline in reserves.
The downturn has been attributed to a decrease in crude oil exports, largely due to oil theft and a lack of investment in essential upstream infrastructure.
The IMF report added that profit repatriation from the oil sector had dipped, albeit slightly offsetting the adverse effects on the current account.
Amid those dynamics, Foreign Direct Investment in the country has remained low, while there has been an uptick in portfolio outflows, including equity and Eurobond repayments as well as repatriations.
The IMF also claimed that the Nigerian authorities was yet to disclose comprehensive information on short-term foreign exchange liabilities, which are crucial for calculating the net international reserves accurately
