The JP Morgan’s Nigeria’s Vanishing $Billions

The revelation: JP Morgan posits that Nigeria’s FX Reserve to be in the neighbourhood of $3.7 billion instead of the $30 billion everyone has been using in reports. Why? Nigeria borrowed money on this reserve and has yet to return the money. In other words, when most fund managers refused to lend to us, we ransacked the reserve.

Nigeria’s bad – Net FX reserves are “significantly lower” than previously estimated, according to a recent analysis by JPMorgan. The American multinational financial firm said the new information is based on partial information from the audited financial accounts of the Central Bank of Nigeria.

“We estimate that CBN’s net FX reserves were around US$3.7bn at the end of last year, from US$14.0bn at end-2021,” JPMorgan said.

Investors have expressed concern that Nigeria’s external reserve is far lower than what the central bank is presenting, referencing the apex bank’s inability to fulfill many of its financial obligations.

Nigeria’s central bank said the country’s foreign reserves stood at $37.09bn as at December 2022, and at $40.52bn as at the end of December 31, 2021

But information from the recent CBN audit reveals that Nigeria’s foreign reserves are far below what the central bank has been publishing for months because much of it has been used to securitize lending from foreign banks.

This now explains why the government is largely probing the Central Bank of Nigeria (CBN). I hope they make the outcome public for We The People.

In the bank’s report – “Nigeria: Reform pause rather than fatigue” – you get a conflicting message from what other big banks have written, indicating that everyone is still trying to figure things out.

Good People, as that probe goes on, expect more revelations with cross-border implications. Everyone is going to publish a report because the searchlight is coming. Question: if this was not disclosed, what was the money used for? “Also, the CBN owes JP Morgan and Goldman Sachs a combined sum of $7.5bn as of the financial year ended December 2022. Included as part of its liabilities is another $6.3bn owned in foreign currency forwards.” – from CBN recent statement

Comment on Feed

Comment 1: I don’t understand much in economics but it means that naira will drop furthermore?

My Response: Not really immediately since Afreximbank gave us a loan ($3B) to support Naira in the export import window. That money should be enough for 30 days. So, there is nothing to worry about for the next 30 days. What happens after that time will decide the near-term trajectory of Naira

The revelation: JP Morgan posits that Nigeria’s FX Reserve to be in the neighbourhood of $3.7 billion instead of the $30 billion everyone has been using in reports. Why? Nigeria borrowed money on this reserve and has yet to return the money. In other words, when most fund… pic.twitter.com/bazS32Uahu

— Ndubuisi Ekekwe (@ndekekwe) August 21, 2023

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