CBN dismisses reserves decline concerns, cites strong external buffers

….Our reforms are durable, resilient to global shocks – Edun The Central Bank of Nigeria (CBN) has dismissed concerns over recent movements in the country’s external reserves, stating that the fluctuations are normal and do not pose any risk to economic stability.Speaking during a press briefing at the conclusion of the IMF/World Bank Spring Meetings in Washington D.C., Olayemi Cardoso, CBN governor said Nigeria’s external position remains strong, supported by robust buffers built through recent policy reforms.According to him, the current level of reserves is well above international benchmarks, providing a comfortable cushion against external shocks.He noted that Nigeria’s reserves currently cover about 13 months of imports, significantly higher than the minimum threshold typically recommended by global financial institutions, underscoring the country’s resilience.“It is normal to see movements in reserves, and there is no cause for concern. We are in a very comfortable position relative to global benchmarks,” he said.The governor emphasised that the structure of Nigeria’s foreign exchange market has evolved, reducing the relevance of short-term reserve fluctuations compared to previous years.He explained that the market is now more liquid and increasingly market-driven, with less reliance on Central Bank intervention.“In the past, the Central Bank played a dominant role in determining the market. That is no longer the case. Today, the market has greater liquidity, and investors can move in and out more freely,” he said.As a result, he noted that focusing excessively on marginal changes in reserves may no longer provide an accurate picture of the country’s external stability.“What matters more now is the overall direction and the strength of the system, rather than short-term swings,” he added.Wale Edun, minister of Finance and Coordinating Minister of the Economy, who led the Nigerian delegates to the IMF/World Bank Spring Meetings in Washington D.C said “Nigeria came to these meetings with a clear message: our reforms are durable, self-sustaining, and strengthening our resilience to global shocks, while also positioning the economy for inclusive growth.”“Across our engagements this week, there was strong recognition and commendation of Nigeria’s reform programme. These reforms have strengthened our economic fundamentals and restored confidence. They have also placed the country in a better position to withstand external shocks, including those arising from the ongoing geopolitical tensions in the Middle East,” Edun said. He said with the transition to market-reflective pricing for foreign exchange and petroleum products, the economy is adjusting relatively smoothly, without resorting to distortionary controls, unsustainable subsidies, or rapid depletion of reserves. “This improved resilience was widely acknowledged in our engagements with the IMF, the World Bank, and other development partners and bilateral counterparts,” he said. “Nigeria’s message in Washington was not only about stability, it was also about growth. Our reform agenda is now transitioning from stabilisation to growth acceleration,” Edun said. “We are moving forward with confidence towards investment, inclusive growth, and job creation, with a medium-term growth target of about 7 percent annually. This will be driven by reforms in power, agriculture, transportation, infrastructure, digital innovation, and human capital development.Cardoso linked Nigeria’s improved resilience to deliberate policy actions taken over the past two years, including foreign exchange reforms and broader macroeconomic adjustments.He said these measures have helped the country absorb global shocks more effectively, noting that Nigeria experienced only minimal volatility during recent disruptions that affected many emerging markets.“In situations where other economies faced significant currency pressures, Nigeria’s experience was relatively stable. That reflects the buffers we have built and the policies we have implemented,” he said.He stressed that building buffers, both financial and institutional, remains a key priority, especially amid heightened global uncertainty driven by geopolitical tensions and shifting financial conditions.The CBN governor added that maintaining policy discipline and staying the course on reforms will be critical to sustaining stability and investor confidence.Overall, he said Nigeria’s external sector remains resilient, with strong buffers, improved liquidity, and a more flexible foreign exchange framework supporting the economy against future shocks.