International Monetary Fund says Nigeria’s foreign exchange (forex) reserve dropped by $2.9 billion within eight months.
IMF disclosed this in a statement on Wednesday, after its end of mission visit to Nigeria.
According to the Fund, “Despite supportive oil prices, gross FX reserves fell to $38.6 billion at end-May 2022, having reached $41.5 billion in September 2021 boosted by Special Drawing Rights (SDR) allocation and Eurobond issuance.”
IMF added that, helped by import compression and higher net oil balance, the country’s current account deficit narrowed significantly in 2021.
But the Fund noted that “the improving trade balance, which has continued so far in 2022, is having a limited impact on forex strains with the exchange rate premiums in the parallel market staying in the 35-40% range since October 2021.”
IMF further said that although Nigeria’s real Gross Domestic Product (GDP) growth is broadening to all sectors except oil, inflation still remains high.
Economic recovery, according to the Fund, however, continues to gain strength on the back of services and agriculture with GDP growth reaching 3.6% in Q1 2022.
“The economic outlook is challenging with high food prices, raising food security concerns,” it stated, highlighting Central Bank of Nigeria’s inflationary intervention of raising Monetary Policy Rate (MPR) by 150 basis points to 13 per cent.
From a positive perspective, IMF believes Dangote Refinery’s commencement of operations and decisive steps to mobilise revenues, in line with the Strategic Revenue Growth Initiative (SRGI) could spur inclusive growth and development.
The Fund noted that its team led by Ms Jesmin Rahman met with Nigeria’s officials from June 6 to 10, 2022, to discuss recent economic and financial developments, and the economic outlook for the country.