The Governor of the Central Bank of Nigeria (CBN), Dr. Olayemi Cardoso, on Monday said that about $2.4 billion foreign exchange (FX) backlog was not valid for settlement by the Federal Government.
Cardoso, in an exclusive interview with Arise Television, clarified that out of the initially reported $7 billion FX liabilities of the Federal Government, about $2.4 billion were identified as invalid following a forensic audit by Deloitte Management Consultant.
According to him, the audit’s findings showed various infractions, including non-existent entities and unauthorized FX allocations, making the liabilities invalid.
The apex bank governor said: “We contracted Deloitte Management Consultant to do a forensic of all these obligations and to tell us what was valid and what was not. Of course, we were committed to ensuring that we would pay all valid transactions.
“The result that came out of this was startling in a great respect; it was quite startling. We discovered that of the roughly $7 billion, about $2.4 had issues, which we believed had no business being there – and the infractions from that range from so many things.
“For example, not having valid import documents and in some cases, even entities that did not exist and in some cases, beneficiaries and account parties that asked for FX and got more than they asked for. And those who didn’t even ask for any and got. So, there was a whole load of infractions there which, I said, amounted to about $2.4 billion out of the $7 billion headline figure”, he added.
Cardoso explained that the CBN had already settled legitimate FX requests totalling $2.3 billion, leaving an outstanding of approximately $2.2 billion, which due to its invalidity would not be settled.
He further clarified: “We are not paying if you don’t qualify; they are not validly constituted requests. And of the validly constituted ones, we have settled about $2.3 billion and that applies to the airlines and a whole load of different entities spread throughout our economy – we’ve settled that already.
“And now what remains is about $2.2 billion to be settled and I am confident that we will shortly be addressing those and be able to move on and make progress.
“Now, how are we dealing with those that are not valid? As they were identified, we wrote to the authorized dealers to come in and explain what the situation was and where the numbers differed. And sadly, quite frankly, I think much of those have not been disputed to our satisfaction”, the apex bank governor stressed.
Cardoso assured that the outstanding balance would be cleared very shortly.
The banker also spoke on some misconceptions about the CBN’s role in economic interventions, pointing out that the recent measures adopted were desirable, especially during micro and macroeconomic challenges such as the country is currently contending with, stressing the importance of thoughtfully implementing them to avoid destabilizing the economy.
For instance, he lamented that excessive liquidity injections into the economy was partly responsible for the current economic distortions, including inflation.
According to him, the apex bank’s economic interventions, totalling about 25% of the N40 trillion loans and advances, were also responsible for the imbalances.
Cardoso spoke on the need for the CBN to refocus on its primary mandate, such as controlling inflation and stabilizing prices, rather than direct interventions in the economy, as a strategic step towards creating a more stable economic environment for investments and businesses to thrive.
He assured on the readiness of the apex bank to collaborate with relevant partners for future interventions to ensure effective management of such funds to achieve desired objectives.
