The Central Bank of Nigeria (CBN) says the recent estimate
of the country’s foreign exchange (FX) reserves by JP Morgan was presented “out
of context”.
Hassan Mahmud, director of monetary policy department, CBN,
spoke when he featured on Moneyline with Nancy, a programme on Africa
Independent Television (AIT), on Wednesday.
Earlier this week, JP Morgan estimated that the CBN’s net FX
reserves fell to $3.7 billion at the end of 2022, compared to $14 billion in
2021.
Reacting to the development, Mahmoud said that fluctuations,
liabilities and encumbrances to the reserves were only natural and normal.
“We also read the JP Morgan numbers in-house and we didn’t
panic over that. That’s not the first time we are seeing people, institutions
reeling out numbers; they must have their intentions to do that, whether to
rouse market sentiments, whether to mislead the public,” Mahmud said.
“But the central bank has tried as much as possible to be
transparent. What I will say about those numbers is that it is just funny in
the sense that number one, reserves like any account balance, is a flow; there
are changes that go within it at any particular time.
“Two, even if you have outstanding liabilities, you don’t
mark the outstanding liabilities to market on a day and say this is your net
balance.
“I can have $20 million in my account and I am owing someone
maybe $13 million that is supposed to be paid in 2027; you can’t come in 2023
and say if I remove that $13 million, your money is $7 million or you are
having $7 million.
“Now, I am not having $7 million, I am having $20 million.
Because before I took a facility of $13 million, I know in the next three
years, I will get $17 million so I can pay you back.
“But for you to come and tell me that no, your balance is $7
million and you can’t pay back in three years; it’s just putting it out of
context.
“I don’t know how they did their calculations and I don’t
have any information about that, but we also saw those numbers that came out.”
Mahmud said the CBN owned about 80 percent of funds in
reserves mainly to support the local currency in periods of volatility as well
as to boost confidence of foreign investors.
““We have the numbers there. The central bank’s reserves are
on our bank net. Yes, the figure you see today may not be exactly to the last
decimal point but you have that picture that you are seeing there,” the CBN
official said.
“We have $33bn, there is IMF facility there, the SDR is also
there, we have the JP Morgan numbers that you mentioned, we have forwards, they
are all there.”
Asked if the public should disregard the JP Morgan estimate,
Mahmud said: “It is a ridicule for us (CBN) to come to the public domain,
whether the CBN governor or deputy governor to speak on issues by JP Morgan. I
don’t even know who said it in JP Morgan.”
“I don’t want us to
get to that level where we will be ridiculing ourselves as a sovereign or
country because of a private investor that has its own motives for giving those
numbers. It could also be that those numbers were quoted out of context.”
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