Forex: CBN Knocks Off $7bn Legacy Backlog, Settles Valid Claims

BY EDMOND ODOK – The Central Bank of Nigeria (CBN) says in keeping with the promise made by the Governor, Olayemi Cardoso, to process an inherited backlog of US$7 billion in claims, all valid foreign exchange backlogs have now been settled

Acting Director of Corporate Communications, Mrs Sidi Ali, confirmed the settlement of all outstanding foreign exchange (FX) obligations in a statement issued in Abuja on Wednesday, adding that the apex bank recently concluded the payment of $1.5 billion to settle obligations to some bank customers, effectively settling the residual balance of the FX backlog.

Mrs Ali, who disclosed that independent auditors from Deloitte Consulting meticulously assessed these transactions, ensuring that only legitimate claims were honoured, also said “Any invalid transactions were promptly referred to the relevant authorities for further scrutiny.”

At one of his recent outings, Cardoso, while explaining that an inherited $7 billion FX backlog on assuming office has dropped to $2.2 billion, said; “We made clearing the FX backlog a priority to restore credibility and confidence in the Nigerian economy. It was important that we go through an independent and credible process that would determine the authenticity of those obligations, and, at this point, I can tell you that we have now cleared all genuine, verifiable transactions. This encumbrance to market confidence in the country’s ability to meet its obligations is now totally behind us”.

The CBN Spokesperson further said in the statement thus; “Clearance of the foreign exchange transactions backlog is part of the overall strategy detailed in last month’s Monetary Policy Committee meeting to stabilise the exchange rate and thereby curb imported inflation, spurring confidence in the banking system and the economy.

“Cardoso used the MPC meeting and a subsequent conference call with foreign portfolio investors to set expectations for sustained increases in Nigeria’s foreign currency reserves and improved liquidity in the foreign exchange market”.

The statement said; “The CBN followed this month by reporting a significant increase in external reserves, rising by $993 million to $34.11 billion as of March 7, 2024, the highest level in eight months. The month-on-month increase was driven by a marked advance in remittance payments by Nigerians overseas, as well as higher purchases of local assets, including government debt securities, by foreign investors.”