CBN Facilitates $5.63 Billion in International Payments Amid Economic Challenges in 2024

The Central Bank of Nigeria (CBN) facilitated $5.63 billion in international payments during the first nine months of 2024, marking a 2.7% increase from $5.48 billion in the same period in 2023. This growth comes amidst ongoing challenges such as the depreciation of the naira and inflation, highlighting the CBN’s efforts to manage the country’s foreign exchange liquidity. The rise in payments is part of broader trends observed earlier in the year, where international payments saw a 31% increase between January and May 2024.

A major factor behind the increase in international payments is a significant rise in foreign debt servicing. Debt repayments accounted for 63.6% of total international payments, amounting to $3.58 billion—an increase of 39.8% compared to the previous year. This surge in foreign debt obligations is a result of Nigeria’s increasing financial commitments on the global stage.

However, other categories of international payments saw declines. Payments for letters of credit fell by 52.5%, dropping to $506.06 million from $1.07 billion in 2023. This decline reflects a decrease in imports, largely attributed to weaker consumer demand. Similarly, direct remittances declined by 16.7% year-on-year, amounting to $1.55 billion, driven by reduced payments for international services by Nigerian residents.

Looking ahead, analysts at Cordros Research predict that international payments will remain high, primarily due to the Nigerian government’s ongoing debt repayment and servicing obligations. They also expect that as foreign exchange liquidity improves and consumer demand picks up, there will be a gradual rise in imports, which would lead to an increase in payments for letters of credit and direct remittances.

Source: THE SUN