The nation’s external reserves, which have risen steadily since last year due to high oil prices and stability in the foreign exchange market, rose higher to $48.29bn on Friday.
Data obtained from the Central Bank of Nigeria’s website on Friday showed that the reserves recorded $4.95bn appreciation in 11 weeks, from $44.34bn recorded from the beginning of the year till date.
It was gathered that the performance of the reserves were driven mainly by proceeds from crude oil, gas exports and crude oil-related taxes as well as reduced funding of the Wholesale Dutch Auction System on account of the huge inflow of foreign portfolio investments.
The foreign exchange reserves rose by 30 per cent year-on-year to hit a 32-month high of $42.56bn by October 29.
It, however, failed to hit the $50bn mark by the end of 2012, which was the Federal Government’s target.
Figures obtained from the CBN showed that the reserves, which had closed the year at $44.26bn on December 24, 2012, finished $6bn below the government’s $50bn target.
Although the reserves rose by $11.34bn, representing 34 per cent increase in 2012, from $32.92bn in 2011, it failed to meet the target set by the Minister of Finance, Dr. Ngozi Okonjo-Iweala.
The minister had announced in July last year the Federal Government’s set target of $50bn external reserves by the end of 2012, from the July figure of $36.37bn.
Okonjo-Iweala, at a meeting with the Organised Private Sector in Lagos, stressed the need for the country to shore up its external reserves.
Although analysts noted that the current external reserves were sufficient to cover over 11 months of imports of goods and services, higher than the threshold of three months, they warned the country not to get too excited about it.
The Managing Director, Financial Derivative Company Limited, Mr. Bismark Rewane, who spoke with our correspondent, said, “The external reserves is robust and the current position is comfortable but it does not mean we are not vulnerable.”
Analysts at FSDH Merchant Bank Limited, in a report made available to our correspondent, said the collaboration between the Federal Government and the CBN to improve the external reserves position had continued to yield positive results.
The report stated, “The favourable oil prices at the international market, improved domestic output, fiscal prudence, improved ratings from agencies and the inclusion of FGN Bonds in the JP Morgan emerging market government bond Index have all contributed to the improvement in the external reserves position of the country.
“The current external reserve can support stable exchange rate in Nigeria. The current level of external reserve is higher than both the International Monetary Fund and FSDH Research projections. The reserve is sufficient to cover over 11 months of imports of goods and services, higher than the threshold of three months.”
The National Bureau of Statistics last Monday said the country’s external reserves would experience less pressure this year due to a reduction for the demand for foreign exchange to settle high import bills.
The bureau said in a report released in Abuja that the projected increase in the value of total merchandise trade was expected to generate higher external reserves through exports.
This, it hoped, would lead to a higher increase in the supply of foreign exchange demand.
Okonjo-Iweala, who is also the Coordinating Minister of the Economy, had said, apart from the external reserves, Excess Crude Account balances were expected to hit $10bn before the end of 2012.
The Federation Account Allocation Committee, however, said it had paid N161.59bn into the ECA, bringing the new balance to $9.66bn as at December 13, 2012
The Accountant-General of the Federation, Mr. Jonah Otunla, at the end of the technical sub-committee meeting of the FAAC in November, said, “I think we have fared very well in the ECA. We targeted $10bn at the end of the year. I am happy to tell you that we have $9.66bn in the account. On percentage basis, that is about 97 per cent of our aspiration for the year.”
Meanwhile, despite the ongoing litigation between the federal and state governments over the ECA, the 36 state governors have demanded the release of $1bn from the account to enable them to meet contractual obligations in their various states.
The Deputy Governor of Sokoto State, Alhaji Mukhtar Shagari, said after a meeting that the states needed the money to meet their financial responsibilities.
“We have held discussion fully on the issue of releasing at least $1bn from the Excess Crude Account to help the state governments to meet up with their financial responsibilities, because most of the states have contracts that are ongoing,” he said.
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