The Central Bank of Nigeria has announced that it has successfully cleared all valid foreign exchange backlogs, thereby eliminating 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 journalists on Wednesday, The Punch reports.
The CBN followed up this month by reporting a significant increase in external reserves, which rose by $993 million to $34.11 billion as of March 7, 2024, the highest level in eight months.
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The month-on-month increase was driven by a significant increase in remittance payments from Nigerians abroad, as well as higher purchases of local assets, including government debt securities, by foreign investors.
Ali emphasised the meticulous efforts made to settle these outstanding transactions.
Notably, the CBN recently completed a $1.5 billion payment to bank customers, resolving obligations and clearing the remaining balance of the FX backlog.
The apex bank stated that independent auditors from Deloitte Consulting meticulously reviewed each transaction, ensuring that only legitimate claims were paid.
It was noted that all invalid transactions were immediately flagged for further investigation by the appropriate authorities.
The statement reads in parts:
“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 $7 billion in claims.
“Clearing the backlog of foreign exchange transactions is part of the overall strategy outlined at last month’s Monetary Policy Committee meeting to stabilise the exchange rate and thus reduce imported inflation, boosting 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.”
Speaking at a recent meeting, Cardoso emphasised the importance of clearing the FX backlog in order to restore credibility and confidence in Nigeria’s economy.
The clearance of the foreign exchange transaction backlog is consistent with the strategy outlined at last month’s Monetary Policy Committee meeting.
The primary goals are to stabilise the exchange rate and reduce imported inflation. The CBN’s goal is to boost confidence in the banking system while also stimulating economic growth.
Cardoso reiterated these expectations during a conference call with foreign portfolio investors, emphasising sustained increases in Nigeria’s foreign currency reserves and increased liquidity in the foreign exchange market.
“We needed to go through an independent and credible process to determine the authenticity of those obligations, and I can now confirm that we have cleared all genuine, verifiable transactions. This impediment to market confidence in the country’s ability to meet its obligations is now completely resolved,” he added.
This action by the CBN marks a watershed moment in Nigeria’s financial history, paving the way for a more resilient and stable economy. As the country moves forward, the successful clearance of the FX backlog serves as a source of confidence for both investors and businesses.
