CBN Governor, Lamido Sanusi
| credits: File copy
| credits: File copy
The external reserves on Tuesday closed 2013 at $43.6bn, approximately $500m below the $44.1bn recorded on December 28, 2012.
According to the latest figure on the Central Bank of Nigeria website, the reserves dropped to $43.6bn on December 30, 2013.
The $43.6bn also shows that the reserves fell by about $700m below the $44.3bn it recorded on January 2, 2013.
Financial and economic analysts said the development showed the reserves did not grow in any way during the year.
The Head, Research and Intelligence, BGL Investment and Securities, Mr. Femi Ademola, said 2013 offered great chances for the country to grow the reserves but it did not.
He linked the lack of increase in the external reserves to a drop in government revenue; increased government spending in Excess Crude Account; and increase in the amount spent in defending the naira by the CBN, among others.
He added, “We are expected to grow the reserves. It was not expected to drop or remain stagnant. And the truth is that 2013 offered us a great chance to grow the reserves but unfortunately we did not.
“To me, I think $30bn external reserves should be good but we should be seen growing it, especially 2013 that we had the opportunity to grow it.”
The reserves had fallen from the peak of $47.1bn on August 14 to $44.1bn on December 17, 2013, indicating $3bn drop within the period.
The reserves, which started the year at $44.3bn, began rising through the year and peaked at $48.8539bn on April 30.
However, the foreign reserves started falling gradually since May. The reserves had fallen to a nine-month low at $45.08bn on October 14.
Between May 2 and August 5, 2013, the foreign reserves dropped by $1.8bn from the peak of $48.85bn to $46.98bn.
The Governor, Central Bank of Nigeria, Mr. Lamido Sanusi, said in May that the outlook for the country’s foreign reserves this year was mixed.
Sanusi told Reuters that the reserves would probably keep expanding, while facing risks from lower-than-projected oil output and falling prices.
According to analysts, the performance of the reserves is driven mainly by proceeds from crude oil, gas exports and crude oil-related taxes as well as reduced funding of the Dutch Auction System on the account of huge inflow of foreign portfolio investments.
However, the CBN governor recently dismissed claims that the reserves were experiencing a sharp decline.
He also allayed fears about the uncertainties in the Nigerian economy and stressed that the reserves could finance about 11 months of importation.
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