Quantcast
Channel: The Punch - Nigeria's Most Widely Read Newspaper »» Business
Viewing all articles
Browse latest Browse all 13057

Sanusi sees mixed outlook for foreign reserves

$
0
0

The Governor, Central Bank of Nigeria, Mr. Lamido Sanusi, has said that the outlook for the country’s foreign reserves is mixed.

Sanusi told Bloomberg on Tuesday that the foreign-currency reserves would probably keep expanding while facing risks from lower-than- projected oil output and falling prices.

He said, “Quantitative easing by central banks in the United States, the United Kingdom and Japan all point to a likelihood of strong capital flows to emerging and frontier markets that may benefit Nigeria. Still, the combination of lower global oil prices and weak output performance in Nigeria may lead to a slowdown.”

Oil production in Nigeria fell to 1.81 million barrels a day in March, the lowest level since September 2009.

According to the CBN, Nigeria relies on crude exports for about 80 per cent of government revenue and more than 90 per cent of foreign income.

Foreign-currency reserves rose 33 per cent to $48.9bn on May 3 from a year earlier, according to data published on the website of the CBN.

Sanusi said, “We always said that the budget based on projections of about 2.5 million barrels per day was founded on overly optimistic and unrealistic assumptions.”

The National Bureau of Statistics had earlier 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 than the demand.

Sanusi had said the country’s foreign 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.

He said the country’s foreign reserves could finance about nine months of imports.

The NBS report stated, “The recent declines in imports are expected to carry on till the third quarter of 2013.

Beyond this point, the growth rate in imports is expected to yield positive year-on-year changes. By the fourth quarter of 2013, growth in the value of total merchandise trade will be driven by both higher imports (relative to fourth quarter 2012) as well as oil and non-oil exports.”


Viewing all articles
Browse latest Browse all 13057

Trending Articles