The Central Bank of Nigeria (CBN) has highlighted potential risks to the growth of external reserves for 2024/2025, citing fuel subsidy removal, increased import bills, and rising external debt servicing obligations. These factors could impact the accumulation of external reserves.
Despite these risks, the CBN remains optimistic about overall economic growth, driven by ongoing policy support for the agriculture and oil sectors, reforms in the foreign exchange market, and the effective execution of the Finance Act 2023 and the 2022-2025 Medium-Term National Development Plan (MTNDP).
The CBN’s guidelines indicate a positive outlook for Nigeria’s external sector, supported by favorable crude oil prices and improved domestic production. However, potential downside risks include lower crude oil earnings, higher fuel import costs, and increased external debt obligations, which could impact reserve growth. Additionally, tight monetary policies in advanced economies raise the risk of capital outflows.
The CBN anticipates that Nigeria’s output growth will continue positively, contingent upon sustained policy support and effective implementation of key reforms. Nevertheless, challenges such as rising energy prices, security issues, and infrastructural deficits could pose risks to short- to medium-term growth.