By Ayo Yusuf
Nigerians reel in shock as global financial service giant, JP Morgan estimated Nigeria’s net foreign reserve to be around $3.7 billion not the $33.8 billion that the Central Bank of Nigeria posted on its website recently.
As JP Morgan’s figure is $30 billion short of the figure that the CBN claims, it is not immediately clear how the discrepancy occurred and Nigeria’s premier bank is yet to comment on the matter.
It could be recalled that the CBN had posted a figure of $33.8 billion as the nation’s reserve on it’s website on August 17 this year.
JP Morgan’s estimate is also much lower than the net figure of $14 billion reported at the end of 2021.
The bank disclosed this in its latest report on Nigeria titled “Nigeria: Reform pause rather than fatigue”.
It noted that the lower-than-reported forex reserve is the result of larger currency swaps and borrowings against the forex reserve.
The global financial institution said: “Based on partial information from the audited financial accounts, we estimate that CBN’s net forex reserves were around $3.7 billion at the end of last year, from $14 billion at the end-2021.”
According to the bank, the assumptions followed an addition of $5 billion in International Monetary Fund Special Drawing Rights (SDR) to external reserves to arrive at total gross forex reserves of US$37.8 billion.
This, it said, was broadly in line with the 30-day moving average of US$37.08 billion previously published on the central bank’s website.
It added that by adjusting the gross external reserves with three key forex liability lines that include forex forwards ($6.84 billion), securities lending ($5.5 billion) and currency swaps ($21.3 billion).
It estimated currency swaps by backing out forex forwards and outstanding Over The Counter (OTC) Futures balances from an overall aggregate published in the financial accounts.
The bank said the CBN still can withstand the pressure accompanying the low forex reserve especially, as profit from swap arrangements between the CBN and commercial banks, accumulate the rates will continue to rise.
Only ten days ago the CBN posted its audited financial statements for the first time in seven years, following the investigation now going on as part of the reforms instituted by the Tinubu government.
The audit revealed that the apex bank received a combined $15 billion cash from JP Morgan and Goldman Sachs in one year.
According to the CBN’s financial statements for the financial year ended December 31, 2022, the CBN Group had entered into a securities lending agreement with Goldman Sachs and J. P. Morgan with the Group pledging its holdings on foreign securities in return for cash.
The statement put the cash received from Goldman Sachs at N.23 trillion ($500 million) in 2021; N.22 trillion ($500 million) and JP Morgan N3.23 trillion ($7 billion) in 2021; while N3.05 trillion ($7 billion) was recognised in other foreign securities, bringing liabilities with both global institutions to $15 billion.
