The Central Bank of Nigeria (CBN) stated in its Monetary, Credit, Foreign Trade, and Exchange Policy guidelines for the fiscal years 2024/2025 that the removal of fuel subsidies, reduced import bills, and rising external debt servicing obligations could negatively impact the growth of external reserves by 2024/2025.
CBN identifies key factors affecting Nigeria’s overall economic growth, including lower crude oil earnings, fuel subsidy removal, lower import bills and increased external debt servicing obligations. However, the Apex bank remains optimistic about Nigeria’s external sector for 2024/2025, anticipating favorable trade conditions due to sustained rises in crude oil prices and improvements in domestic crude oil production.
The CBN also noted that the positive outlook is strengthened by stable crude oil prices, driven by production cuts, as well as increased capital flows and remittances.
According to CBN, “Nigeria’s output growth is expected to maintain a positive trajectory in 2024/2025, The growth prospects are dependent on continued policy support in the agriculture and oil sectors, reforms in the foreign exchange market, and the effective implementation of the Finance Act 2023 and the 2022-2025 Medium-Term National Development Plan (MTNDP). However, factors such as low domestic crude oil production, rising public debt, persistent insecurity, a global economic slowdown, and the ongoing Russia-Ukraine war may present considerable downside risks to fiscal operations in the short to medium term.
The CBN assured that Nigeria’s financial sector will remain resilient in 2024/2025 and this outlook will reflect the bank’s ongoing efforts to monitor vulnerabilities and risks, conduct periodic stress tests, and implement risk mitigation strategies.
