External reserves grow, after dropping by $313m in March
By Jeph Ajobaju, Chief Copy Editor
External reserves grew from $39.54 billion on 1 April to $39.78 billion on 19 April, a gain of $243.83 million in the 19 days, according to figures collated by the Central Bank of Nigeria (CBN).
Foreign reserves had dropped by $313 million in March, starting the month at $39.86 billion and ending it at $39.55 billion on March 30.
CBN Governor Godwin Emefiele said at the last Monetary Policy Committee (MPC) meeting that “the moderate accretion to reserves reflects the duality of Nigeria’s position as an oil exporter and importer of refined petroleum products.”
MPC member Mike Obadan, a professor, explained that for a long time, the oil sector had contributed over 90 per cent of foreign exchange (forex) earnings and external reserves accretion.
“But for some time now,” he added, “this has not been so due to two factors: a huge volume of crude oil theft which has prevented the country from meeting even the OPEC-approved production quota, and the inability of the NNPC, for many months, to make any remittance from direct oil export sales into the Federation Account and external reserves account.
“These are alarming developments which have adversely impacted government’s finances, external reserves accretion and exchange rate stability.
“The inhibiting factors are what the government can check in the short-term.”
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Impact of oil theft on forex, external reserves
In Obadan’s view, it is inconceivable that all the forex earned from the export of crude oil and gas is used to import refined petroleum products or that ‘under-recovery’/petroleum subsidy absorbs all the forex, per reporting by The PUNCH.
“I will therefore strongly appeal to the government to appreciate the grave implications of the oil sector and NNPC’s underperformance and effectively deal with the oil thefts and non-remittance of foreign exchange/naira revenue.
“If, in the presence of the array of security forces in the oil-producing areas, monumental oil theft is taking place to the detriment of the economy, then drastic measures are called for.
“Government should check the untoward developments, through effective security and monitoring, and the positive impact on government finances, external reserves and exchange rate stability will be visible in a short period.”
