The nation’s external reserves continued on the decline, closing the month of November at $44.551 billion, after losing $678.41 million or 1.49 per cent within the period, compared with the $246.588 million or 0.54 per cent slide in the preceding month.
According to data obtained on the Central Bank of Nigeria’s website on Monday, the reserves last touched this level on December 5, 2012, when it stood at $44.545 billion, from where it started rising, particularly at the beginning of this year.
The November decline may push year-to-date growth into negative territories soon, except something positive happens.
Company to the $44.178 billion the reserves level stood on December 28, 2012, the growth has shrunk to just $372.682 million YTD, as against its $48.853 billion peak on April 30, 2013. Between December 28, 2012, and April 30, 2013, the nation’s reserves pool rose by $4.678 billion or 10.58 per cent.
Also, in the seven months between April 30 and last weekend (November 29), 2013, the nation’s external reserves had declined by a princely $4.302 billion or 8.80 per cent.
Speaking at the post-Monetary Policy Committee briefing last month, CBN Governor, Lamido Sanusi, noted that the reserves level would have been worse hit, but for the “massive inflow in portfolio funds.”
The implication of this, he continued, “is that financial markets are extremely fragile and susceptible to external shocks. Clearly, the major risk on the fiscal side at present is not one of escalation of spending but loss of revenue from oil exports.”
According to a communiqué issued at the end of the meeting, signed by Sanusi, the Monetary Policy Committee “continues to express its disappointment at the low rate of reserve accretion in spite of strong oil prices, which is a result of absence of fiscal savings.”
Sanusi said although government had moderated its spending in the second half of the year, the country’s Excess Crude Account (ECA) was diminishing.
“The erosion of fiscal buffers through the depletion of the ECA has further exposed the economy to vulnerabilities while the fall in oil revenue has left capital inflows as the only source of external reserve accretion.
“The Federal Government debt has also risen phenomenally along with its deposit money banks, showing the government as a net creditor to the system.
“This underscores the urgent need for immediate implementation of the Treasury Single Account.
“The continued delay in returning government accounts to the Central Bank is adding to the huge cost of government debt due to poor cash flow management,’’ he said.
The CBN governor called on the fiscal authorities to rebuild buffers in the ECA by blocking fiscal leakages in the oil sector and increasing oil revenues.
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