The foreign exchange (forex) reserve for Nigeria has dropped by $2.9 billion within eight months, the International Monetary Fund (IMF) said in a statement on Wednesday after its end of mission visit to Nigeria.
It said, “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 also said the current account deficit narrowed significantly in 2021 helped by import compression and higher net oil balance.
“However, 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.”
On the real Gross Domestic Product (GDP), IMF stated that the growth is broadening to all sectors except oil, but inflation remains high.
However, economic recovery 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,” while highlighting the Central Bank of Nigeria (CBN) inflationary intervention of raising its monetary policy rate by 150 basis points to 13%.
On the good side, the IMF believes the start of operations at the Dangote refinery and decisive steps to mobilize revenues, in line with the Strategic Revenue Growth Initiative (SRGI) could spur inclusive growth and development.
An International Monetary Fund (IMF) team led by Ms Jesmin Rahman held meetings with the Nigerian authorities from June 6-10, 2022, to discuss recent economic and financial developments, and the economic outlook for the country, it noted.