Wednesday, July 08, 2020 / 09:09 AM / by
FBNQuest Research / Header Image Credit: FBNQuest
CBN data show that Nigeria's gross official reserves declined by US$400m in June to US$36.20bn. This follows the healthy increase the previous month on the back of the disbursement by the IMF of the US$3.4bn it granted within its Rapid Financing Instrument (RFI). The FGN has also sought Covid-19 financing from other multilaterals such as the World Bank and African Development Bank groups. Some of these loans will be subject to policy conditionality, so disbursements may well be staggered. They would compensate for exiting foreign portfolio investors (FPIs).
Total reserves at end-June covered 7.1 months of merchandise imports on the basis of the balance of payments (BoP) for the 12 months to March, and 4.3 months when we add imported services. These figures should be adjusted downwards, however, for the pipeline of delayed external payments, largely repatriation proceeds due to FPIs, that has accumulated since late March.
For Egypt and H2 2019, the comparable figures were 6.6 and 5.4 months. It reported a rise in reserves in June, which may have reflected its own RFI loan and Eurobond issue. This month's reopening of tourism will help, too.
The Nigerian position would have been worse had it not been for the fall in import demand and for the CBN's temporary halt to fx sales to bureaux de change.
The CBN's data series shows one figure for gross fx holdings.
Gross official reserves (US$ bn)
Sources: CBN; South African Reserve Bank (SARB); Central Bank of Egypt (CBE); FBNQuest
For the best disclosure of the three central banks, we defer to SARB's international liquidity position. This shows gross reserves (consisting of gold, SDR holdings and fx reserves including foreign-currency deposits), from which are deducted the same deposits, proceeds of bond issuance, and forward transactions such as swaps.