Still a very healthy fiscal buffer

Gross official reserves rose by US$110m in May to US$47.61bn, the highest since June 2013. The monthly increase, however, was the lowest since June 2017, which we can attribute to greater CBN activity on the offer at its several fx windows, two sizeable Eurobond coupon payments and some portfolio investor exits. The broader picture is the accumulation of US$17.28bn over 12 months on the back of two successful Eurobond issues, the recovery in oil export revenues and the bid by the CBN at the investors’ and exporters’ window (NAFEX).


  • Reserves at end-May covered 17.5 months’ merchandise imports, and 11.2 months when we add services on the basis of the 2017 balance of payments. The ratios are a little less impressive if we use the measure of current account payments (including income debits).
  • This is a healthy fiscal buffer by any criteria but we have to look at definitions to give some context.
  • The figure of US$47.61bn at end-May is gross and not adjusted for swap contracts. The SARB number for gross reserves is US$51.15bn including gold and SDR holdings of about US$7.78bn as well as foreign debt issuance. The SARB figure in our chart is the international liquidity position of US$42.87bn, from which the issuance, swaps, and fx forwards have been deducted.

Sources: CBN; South African Reserve Bank (SARB); Central Bank of Egypt (CBE); FBNQuest
Capital Research
  • We show Egypt in our chart because it has also been popular with offshore portfolio investors. Its reserves, which include gold holdings, amounted to just US$19.0bn at end-October 2016, shortly before, unlike Nigeria, it signed up for an IMF credit package. Like Nigeria, however, the strong accumulation reflects several Eurobond issues as well as portfolio inflows. The CBE’s data series shows net international, and gross reserves as broadly similar.

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