Economy
A financial economist, Prof. Uche Uwaleke, has commended the Central Bank of Nigeria (CBN) for publishing the financial reports of the bank after seven years.
Uwaleke, who is a professor of Capital Market at the Nasarawa State University Keffi, gave the commendation in an interview with the News Agency of Nigeria (NAN) on Saturday in Lagos.
He said that the act would boost the confidence of investors in the Nigerian economy, adding, “it has brought to the fore the true picture of the country’s external reserves being managed by the CBN”.
According to him, it is development shows that it beyond speculation and that much of the reserves are encumbered by securities lending and derivatives contracts entered into by the CBN.
“Much as these contracts are legitimate, the resulting obligations from them put to question the justification for entering into these contracts in the first place and whether adequate safeguards were put in place at the time of entering into these contracts.
“Securities lending is the process of loaning securities to another party which effectively transfers ownership to the other party expected to provide collateral for them.
“In this instance both JP Morgan and Goldman Sachs were said to have provided cash in return,” he said.
This, he said, implied that the current liquid external reserves of about 33 billion dollars did not reflect the true liquidity position of reserves as a significant proportion had been tied down by these contracts.
Uwaleke said, “little wonder the CBN’s ability to intervene in the foreign exchange market has been hampered.”
The expert said as a result of the disclosure, that the current volatility in the foreign exchange market might linger for quite sometime, except the reserves witness substantial accretion from crude oil sales proceeds.
CBN in its recently released Consolidated Financial Statements for 2016 to 2022, posted on its website, showed the bank in 2022 owed JP Morgan, Goldman Sachs, among other liabilities.
The document CBN showed that it owed JP Morgan N3.2 trillion or 7 billion dollars and Goldman Sachs N0.23 trillion or 500 million dollars, while N3.1 trillion or 6.3 billion dollars is owed as foreign currency forwards.
The statement also showed that the CBN generated revenue of N2.87 trillion up from N1.96 trillion in 2022.
It showed that the bank recorded N103.85 billion profit during the period, up from the N75 billion posted in 2021.
Furthermore, the accounts showed that CBN reserves comprised of Time deposits and Money Placements of N4.68 trillion.
It also showed other foreign securities of N5.88 trillion, current accounts with foreign banks N3.34 trillion domiciliary accounts of N294.8 billion, sundry currencies and traveler’s cheques of N199.8 billion and the N578.6 billion Gold Bullion which is 16kg.
Additional analysis based on currencies, showed that reserves had convertible currencies in United States dollars worth N12.45 billion.
Also, N1.6 trillion worth of Chinese Renminbu; N134.5 billion worth of British pound; N75 billion worth of Euro; N33 billion worth of Japanese Yen and N66bn worth of other currencies. (NAN)
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August 12, 2023 @ 19:16 GMT|
Tags: Prof. Uche Uwaleke
