VenturesNow

IMF predicts $8 billion decline in Nigeria’s foreign reserves by 2024

Published

9 months ago

February 13, 2024

The International Monetary Fund (IMF) has cautioned that Nigeria’s foreign reserves could collapse to $24 billion in 2024 in its most recent country report, which shows a notable decline and possible FX issues for the continent’s largest economy.

The nation’s external reserves were $33.12 billion as of February 8, but the IMF predicts that the country’s financial account will face difficulties through 2024–2025 due to a lack of new Eurobond issuances, large repayments of existing funds and Eurobonds totalling $3.5 billion, and ongoing portfolio outflows.

The reported reserves were predicted to decline to $24 billion in 2024, despite anticipating a current account surplus. However, there was hope for a rebound to $38 billion by 2028 as portfolio inflows were predicted to increase once more.

The report read, “Through 2024–25, the financial account is likely to deteriorate, with no projected issuance of Eurobonds, large Fund and Eurobond repayments of $3.5bn, and portfolio outflows.

“Hence, despite a current account surplus, officially reported reserves are projected to decline to $24 billion in 2024 before increasing again to $38 billion in 2028 as portfolio inflows resume.”

The IMF observed that although there was a significant decrease in reserves, the current account had a surplus in the first half of 2023. Reduced exports of crude oil have been blamed for the slump, primarily as a result of oil theft and the underfunding of vital upstream infrastructure.

The IMF study also noted that, while marginally countering the negative effects on the current account, profit repatriation from the oil sector had decreased.

Amidst these circumstances, the nation has seen a decline in foreign direct investment and an increase in portfolio outflows, including equities and Eurobond repayments as well as repatriations.

The report added, “The CBN reported a 30-day average of gross international reserves declining to $33bn in October (almost $4bn below end-2022), covering six months of imports and 83% of the IMF’s ARA metric.

“Following the IMF’s definition of GIR, $8bn in securities is considered pledged collateral that is thus not readily available, reducing GIR under the IMF’s definition to $25bn at the end of October 2023.

“The authorities have not shared full information on short-term FX liabilities, which would be necessary to calculate net international reserves. Through 2024–25, the financial account is likely to deteriorate, with no projected issuance of Eurobonds, large Fund and Eurobond repayments of $3.5 billion, and portfolio outflows.”

VenturesNow

Food prices drive second straight monthly hike in Nigeria’s inflation

Published

3 days ago

November 17, 2024

Ifeoluwa Dada

According to official statistics released on Friday, Nigeria’s inflation rate increased for the second consecutive month in October, rising to 33.88% in annual terms from 32.70% in September, mostly as a result of increasing food costs.

In an attempt to boost economic development and strengthen public finances, President Bola Tinubu devalued the naira and reduced subsidies, which caused inflation to spike in the second half of last year.

As the effects of the naira devaluation started to lessen in July of this year, a slew of hikes in the price of petroleum and devastating floods that destroyed crops once again exacerbated pricing pressures, making the greatest cost-of-living crisis in decades worse in Africa’s most populous country.

According to the National Bureau of Statistics, price increases for basics such as rice, maize, bread, potatoes, and cooking oil prompted food inflation to surge from 37.77% in October to 39.16% year over year.

This year, more than 1.5 million hectares of agriculture have been damaged by torrential rain and floods in 29 of Nigeria’s 36 states, leaving millions hungry and displacing large numbers of people.

In an effort to curb inflation, the central bank has raised interest rates five times this year. On November 26, it is expected to make its final rate decision of the year.

VenturesNow

MTN financial report reveals drop in group service revenue

Published

3 days ago

November 17, 2024

Ifeoluwa Dada

Due to operational difficulties in Sudan and the depreciation of the Nigerian naira, MTN Group, Africa’s largest telecom provider, announced on Thursday an 18.5% decline in service revenue for the third quarter that concluded on September 30.

With 288 million users in 17 African regions, MTN said that its group service revenue dropped from 156.3 billion rand ($6.99 billion) in the same quarter of the previous year to 127.4 billion rand.

Despite stating that “the naira was less volatile on a sequential basis in Q3 than in preceding quarters,” the business reported a 48.7% decline in MTN Nigeria’s income due to the currency’s depreciation.

Due to a stronger Ugandan shilling than the previous year, Uganda’s largest contributor, MTN South Africa (MTN SA), expanded by a meagre 3.3%.

Due to “subscriber registration regulations in Nigeria and a decline in users in Sudan, where the conflict has displaced millions of people,” the business reported that its subscriber base increased by 1.6% to 288 million.

Given the higher demand in Nigeria despite the legal obstacles, MTN plans to increase its capital expenditures, which it expects would total between 28 and 33 billion rand for the entire year.