Apparently convinced that the current reform efforts of the President Bola Tinubu-led administration would impact the nation’s socio-economic system positively in the months ahead, the Central Bank of Nigeria (CBN) has projected that the rising inflation and foreign exchange (FX) rates would decline in 2024.
Similarly, the CBN also predicted that there would be less FX earnings by the country from oil exports in the coming year.
The apex bank governor, Dr. Olayemi Cardoso, made these forecasts on Thursday when he appeared before the Joint Committee on Banking, Insurance and other Financial Institutions of the National Assembly.
Recalling that total trade from Nigerian Foreign Exchange Market (NFEM) totalled N18.804 billion as at the third quarter of 2023, the banker predicted that the outlook for the nation’s domestic economy for 2024 iremained very positive, as both the inflation and exchange rates would absolve the volatile pressures on them and get them stabilised.
He said: “The outlook for the domestic economy remains positive and is expected to maintain the positive trajectory for 2024.
“Inflation pressures may persist in the short-term but is expected to decline in 2024.
“Exchange rate pressures are also expected to reduce significantly with the smooth functioning of foreign exchange market”, Cardoso added.
The CBN governor further clarified that the unification of the FX rates at official and unofficial markets in June had resulted in a new approach in the management of FX rate, aimed at reducing arbitrage, rent-seeking behaviour and speculation in the market.
He clarified: “The policy aims to create a market where the demand and supply of foreign exchange determines the exchange rate.
“The premium has narrowed and our focus on increasing the autonomous FX supply will lead to more stability and further narrowing of the premium.
“Total trade in the third quarter of 2023 stood at N18.8 billion and exports valued at N10.3 billion, while total imports stood at N8.4 billion”, the apex bank governor added.
According to him, this resulted into positive trade balance which will lead to improved accretion of the nation’s external reserves, adding, however, that due to domestic prevailing factors, less revenue would be earned from oil exports in 2024.
Cardoso further said: “We expect less revenue from oil exports due to the production limit of 1.78mbpd in 2024. The OPEC approved quota for Nigeria is 1.8mbpd, which is higher than the 2024 budget assumption.
“However, the country’s production has been below these thresholds. The budget benchmark for 2023 was 1.69mbpd but the highest level of production during the year was about 1.35mbpd in Q3 of 2023.
“The reasons for the underperformance of the oil production target include: crude oil theft and pipeline vandalism, production shut-ins and divestments by major oil companies”, the apex bank governor stressed..
Earlier in his remarks, the Chairman of the Joint Committee on Banking, Insurance and other Financial Institutions of the National Assembly, Sen. Tokunbo Abiru, explained that the interactive session was organised for statutory briefing by CBN, in line with extant laws.
This is even as the Co-Chairman of the Committee, Hon. Mohammed El-Rufai, lauded the Cardoso-led management of the apex on measures currently being introduced and implemented to ensure the stability of the nation’s economy.
