Foreign debt cleanup costs CBN N13.9tn in 2024 – Report

• Published On: 04 May 2025 at 03:20

According to Bloomberg, the Central Bank of Nigeria recorded a 13.9 trillion naira ($9 billion) loss in 2024, driven by the settlement of delayed derivatives contracts, as part of a strategic campaign to reduce foreign currency obligations and restore investor trust in the naira.

The loss, which increased sharply from 6.3 trillion naira in 2023, reflects the CBN's attempts to settle long-standing "legacy transactions," reduce FX exposure, and boost net foreign reserves.

The CBN's transparency initiative, which began in 2023 with the publication of its financial statements, aims to signal operational clarity and support broader reforms.

These include lifting capital controls, floating the naira, and attracting dollar inflows to address Nigeria's acute forex shortage.

However, the reported loss has raised questions about the genuine level of Nigeria's external reserves and the CBN's ability to stabilize the naira, which has fallen by nearly 71% versus the dollar since June 2023, after President Bola Tinubu's forex reforms.

The CBN's financial ties with JPMorgan Chase & Co. and Goldman Sachs, which included foreign-currency-backed deals to boost government finances, drew additional scrutiny.

The CBN certified in April that it had satisfied these liabilities, which included currency swaps and forward contracts, bringing net foreign-currency reserves to $23 billion by December 2024.

Gross external reserves increased to $37.9 billion as of April 30, 2025, a three-week high, according to Bloomberg data.

Meanwhile, liquidity management expenses increased to 4.5 trillion naira in 2024, up from 1.5 trillion naira in 2023, owing to the CBN's issuance of high-yield, short-term securities to reduce excess liquidity, contain inflation, and stable the currency.