ON Friday, Nigeria’s foreign reserves climbed to $34.14bn, reflecting a notable 4.06 percent increase from $32.74bn reported earlier in June 2024. This surge, detailed in a report by The Punch newspaper, underscores the impact of recent financial injections from the World Bank, as confirmed by sources familiar with the matter.
The government secured substantial loans from the World Bank, primarily aimed at fortifying the country’s energy distribution sector. Specifically, in May, the Bureau of Public Enterprises disclosed that Nigeria had obtained a $500 million loan from the global lender. This financial manoeuvre is part of broader efforts to revitalise key sectors of the economy.
Further boosting Nigeria’s economic resilience, the World Bank announced a comprehensive aid package totalling $2.25bn. This financial support is intended to stabilise Nigeria’s economy amidst current challenges and enhance support for vulnerable populations facing economic hardship. The World Bank emphasised that these funds will aid Nigeria’s ongoing initiatives to diversify revenue sources away from oil and ensure fiscal sustainability.
Earlier reports had highlighted concerns over Nigeria’s foreign exchange reserves, particularly in April when reserves dropped by over $2bn within a single month. This decline occurred concurrently with a recovery in the value of the Nigerian currency, causing unease among the public. As of April 15, 2024, Nigeria’s forex reserves had decreased to $32.29bn from $34.45bn on March 18, 2024, marking the lowest level since 2017.
Addressing the reasons behind this decline, Olayemi Cardoso, Governor of the Central Bank of Nigeria, clarified during the IMF/World Bank Spring Meetings that the reduction was primarily due to debt repayments rather than efforts to stabilise the country’s currency.
In summary, Nigeria’s recent increase in foreign reserves to $34.14bn signals a positive turn driven by strategic financial engagements with the World Bank. These initiatives are pivotal in Nigeria’s quest for economic stability, emphasising the importance of diversified revenue streams and prudent fiscal management in the face of global economic uncertainties.
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