FG May Sell Assets to Improve Depleting Foreign Reserves

The continued depletion of Nigeria’s external reserves as a result of dwindling crude oil prices and huge demand for the green back, experts in the nation’s financial sectors have stated that the federal government may sell its assets to foreign investors to shore up reserves.

Data released by the Central Bank of Nigeria (CBN) last Friday showed that the nation’s external reserves fell to $28.1 billion on January 28, the lowest level since 2005,

On December 31, 2015, the reserves closed at $29.070 billion, reflecting a decline of 15.79 per cent year-on-year (YoY) from $34.52 billion a year ago.

During the first 11 days of this year, the foreign reserves fell by $288 million, and stood at $28.782 billion on January 11.

Analysts who spoke to the media on the condition of anonymity said, the situation can only be remedied by the sale of the assets.

The CBN had recently stated that with the continued depletion of the foreign reserves, providing forex to the BDCs was no longer sustainable.

The CBN Governor, Mr. Godwin Emefiele, had stated that between July 2014 and January this year, the country’s external reserves had suffered a great pressure from speculative attacks, round-tripping and front-loading activities by players in the foreign exchange market.

These, he pointed out, had led to a decline in the reserves from $37.3bn in June 2014 to $28bn currently.

Manufacturers and foreign investors have been calling for flexibility in the foreign exchange policies of the CBN as businesses continue to suffer from the restrictive policies of the central bank.

The Managing Director, International Monetary Fund (IMF), Christine Lagarde, had in a meeting with President Muhammadu Buhari earlier January stressed the need for flexibility with monetary policies in order not to deplete the reserves.