‘CBN committed to cleaning up financial services industry’
Abuja -- The Central Bank OF Nigeria, CBN, is committed to cleaning up the financial services industry to boost market confidence, according to its spokesperson Hakama Sidi Ali.
Ali said, in a statement announcing the clearing by the CBN of the entire foreign exchange forwards liability of 14 banks, that the bank will continue to settle legitimate forex backlog to clear all outstanding liabilities.
The CBN said settlements with foreign airlines have now begun.
Africa's biggest economy has about $7 billion in forex forwards that have matured, a major concern for investors as foreign currency shortages continue to weigh down the naira currency, despite assurances by the apex bank to clear the backlog.
So far, about $2 billion of the backlog across sectors such as manufacturing, aviation, and petroleum have been paid, Ali said in the statement.
He added that an independent forensic review of the backlog commissioned by the central bank revealed "grave infractions, gross abuse, and significant noncompliance with market regulations."
Appropriate sanctions will be enforced on offenders, in collaboration with relevant agencies, Ali said.
Meanwhile, the rating agency Fitch said the CBN lacks the foreign exchange to clear the backlog of demand, as the country's high interest payment to revenue ratio weighs on its sovereign credit rating.
Gaimin Nonyane, director of Middle East and Africa sovereigns with Fitch, said foreign exchange shortages in Nigeria would keep pressure on the naira, where there is currently a 30% gap between the official and parallel rates.
"We think that the central bank is still very well short of the amount it needs to be able to clear the foreign exchange backlog and also meet the extremely large external financing by the private sectors," Nonyane said in a webinar.
Nonyane said Fitch expected the naira to end the year just above 900 against the dollar.
The official rate is currently at N846 to the dollar, but has wildly fluctuated, going past N1,299 this month, according to LSEG data.
She added there had been some backtracking in fuel subsidy elimination. Tinubu allowed prices to triple in May, but naira pump prices have not moved since July despite global price fluctuations and significant naira weakness.