- Foreign Reserves Rise to 4-year High in January
Rising global oil prices boosted Nigeria’s foreign reserves in January 2018, the reserves which rose by 50 percent in 2017 from $23.6 billion low of October 2016, jumped to $38.8 billion in 2017.
According to the new Central Bank of Nigeria’s statement released on Monday, foreign reserves increased further in January, rising to $40.4 billion. The highest level since January 2014.
The foreign reserves which had hit $62 billion in September 2008 before $12 billion was used to settle external debts, was projected by the CBN Governor Mr. Godwin Emefiele at the Annual Bankers’ Dinner of the Chartered Institute of Bankers in November to hit $40 billion mark before the end of 2018. However, that was achieved two months later.
According to the data, the foreign reserves gained $12.9 billion between December 2016 and December 2017, with more than $1 billion from later part of December 2017 and January 2018.
Experts believe rising foreign reserves and expanding manufacturing sector will further deepen business confidence and strengthens job creation in the nation.
But the rebound in economic growth and increasing forex intervention are yet to translate to broad job creation since the economy rebounded from financial crisis in the second quarter of 2017, as over 4 million Nigerians reportedly lost their jobs in 2017 with unemployment rate advancing to 18.8 percent from 14.2 percent in 2016 and youth unemployment/underemployment increasing from 47 percent to 52.65 percent of the working population, according to the National Bureau of Statistics.
Therefore, in order to encourage job creation, the monetary policy committee needs to lower interest rate from 14 percent to discourage the rush for fixed income investment and encourage broad participation in real economic growth both in the manufacturing and non-manufacturing sectors.
“The tax holiday is a fiscal stimulus but needs to be combined with an effective monetary policy in order to compensate for revenue shortfall with economic growth,” said Samed Olukoya, a foreign exchange research analyst at Investors King Ltd.