Gross official reserves increased by US$950m in December to US$43.12bn on the back of the FGN’s latest Eurobond sales which raised US$2.86bn. This accretion has been partly countered by two negative developments. The first is the continuing, and well-documented exit of some offshore portfolio players from Nigeria, as from other emerging/frontier markets. The CBN is now a regular seller of fx at the investors’ and exporters’ window (NAFEX). The second is the apparent withdrawal on the FGN’s instructions of US$1.6bn from the excess crude account.
Reserves at end-December covered more than 16 months’ merchandise imports, and nine months when we include services on the basis of the balance of payments (BoP) to June 2018. This remains a more than adequate buffer.
Some definitions are required for the sake of clarity, however. The Nigerian data are gross, cover just fx and exclude swap contracts.
The South African series in our chart shows the international liquidity position. This measure includes gold and SDR positions at the IMF of US$7.7bn combined along with fx and forward commitments, and then deducts swaps and deposits arising from foreign debt issuance. Its reserves have been remarkably stable and enjoyed a modest boost in December due to a firmer US dollar gold price.
Official reserves (US$ bn)
Sources: CBN; South African Reserve Bank (SARB); Central Bank of Egypt (CBE); FBNQuest
As for the CBE’s data, net international and gross reserves are similar. Egypt’s reserves declined by about US$2bn in December, which could reflect the withdrawal of offshore investors.