Nigeria's foreign reserves fall by $640n during May as government used cash to fund budget

NIGERIA'S external reserves fell by $640m during the month of May compared with the month before according to statistics just published the Central Bank of Nigeria (CBN) as a result of the federal government using cash from it to fund its budget.

As a result of the coronavirus pandemic, Nigeria has suffered from the effects of the global economic meltdown, which has hurt international commerce. This has led to the government having to dip into its foreign reserves to help fund its budgetary commitments due to the fact that reduced crude oil sales have limited treasury revenue.

CBN governor, Godwin Emefiele, said: “This reflects sales to the foreign exchange market and third-party payments. As a consequence of the lower foreign exchange receipts, the official external reserves declined.

“External reserves stood at $35.44bn at end-January 2021, a decrease of 2.8% and 3.5% from $36.46bn in December 2020 and $36.73bn in January 2020.”

In March, the reserves fell by $178m after dropping from $34.99bn as of March 1 to $34.82bn at the end of March 31. In February, the reserves dropped by $1.1bn, falling from $36.19bn as of February 1 to $35.09bn on February 26.