External Reserves grows to $38.5bn as Tinubu borrows $21bn
Sopuruchi Onwuka
Enhanced inflow of foreign exchange from diverse sources has helped raise the Nigerian external reserves to $38.5 billion at the weekend, leading to bearish sentiments at the foreign exchange market where the value of the local Naira has continued to fluctuate.
According to data from the Central Bank of Nigeria (CBN), the enhanced inflow of foreign exchange triggered stronger demand from the foreign exchange market as the market struggled to find equilibrium.
The Oracle reports that the fate of the Naira in the international money market has been dangling around signals from the government’s moves at activating a new borrowing plan which analysts fear would ultimately worsen the country’s debt services obligations and plunge the economy into deeper depression in the short future.
The Senate had on July 22 approved President Bola Tinubu’s $21 billion external borrowing plan, sinking the country deeper into external debts by some $21 billion.
The new debt plan is explained as part f measures by government to plug gaps in the 2025 fiscal spending plan which was premised in bogus oil revenue projections.
Chairman of Senate Committee on Appropriations, Solomon Adeola, had explained that the borrowing plan would complete the revenue sources required to fully fund the budget.
The plan includes loans of 4 billion euros, 15 billion yen, $65 million grant and $2 billion in mixed borrowings the administration says it requires for infrastructure, healthcare, education, security and housing.
The Oracle reports that most of government’s borrowings have only plunged the country deeper into the debt abyss while delivering disproportionate dividends.
Analysts fear that Tinubu’s new borrowing arrangements would only exacerbate the country’s worsening economic catastrophe manifesting in foreign exchange squeeze, local currency depreciation, galloping inflation, rising poverty and associated social instability.
According to the new CBN data, favorable Naira value at the foreign exchange market translated to strong demand for the dollar at the official window where the local currency appreciated from N1535.61 to N1534.78 per dollar following bearish sentiments associated with news of rising external reserves.
The CBN data showed that Nigeria’s gross foreign reserves rose by $132.75 million to $38.50 billion due to the latest round of successive inflows from sources suspected to include oil receipts and diaspora remittances.
