Foreign reserves rise to $41.86bn, MAN cautions on withdrawal


By Sunday Ojeme, Published: Friday, 16 Apr 2010

The gradual restoration of peace in the Niger Delta is beginning to impact on the country‘s foreign reserves. The reserves, which had declined consistently since the beginning of the year, gained within the week as it moved from about $40bn in the last few weeks to about $41.86bn on Thursday.

The last time the reserves recorded a major increase was in December 2009 when it peaked at $44bn, which it sustained briefly before sliding to $42bn at the beginning of 2010.

According to the details posted on the Central Bank of Nigeria’s website on Thursday, the reserves, which stood at $41.03bn as at March 22, 2010, slipped to $40.72bn on March 24 before moving again to $41.86bn.

Since the beginning of the year, the external reserves have declined steadily from $42.39bn to $40.72bn before climbing again. Speaking to our correspondent on the development, the President, Manufacturers Association of Nigeria, Mr. Bashir Borodo, who attributed the improvement to the rise in oil prices at the international market and the CBN‘s effort to stabilise the naira at the foreign exchange market, also advised that the Federal Government should be cautious with the manner in which it spent the reserves on infrastructure development.

According to Borodo, ”Oil price has gone up. There is also the possibility of speculative demand. The CBN has been able to maintain the stability of the naira at between N148 and N150.” Crude oil price traded at $80 per barrel average in March compared to $75.32 in February and is responding more to movements in major exchange rates and equity markets.

Crude oil production was moderately down by 1.6 per cent to 1.95 million barrels per day in February. Production had held strongly at two million barrels per day in 2010. Borodo said it was out of place for the Federal Government to withdraw for the purpose of infrastructure development if there was no proper plan on ground to ensure final delivery by contractors.

He said, ”The call on the Federal Government to spend part of the reserves on infrastructure is a matter of personal opinion. It there is a good plan that can absorb the amount, it is alright. It is of no use when you give out contract for infrastructure development and at the end of the day, nothing is done. If the government has good infrastructure plan and a serious company that will deliver, then they can spend it.”


Related News