By Francis Ajuonuma, with agency reports
Governor of the Central Bank of Nigeria (CBN), Dr Olayemi Cardoso, has revealed that his administration inherited the $7bn debt from his predecessor.
Cardoso, who said this yesterday during an interview on Arise TV, said the forensic audit by Deloitte Management Consultant has shown that $2.4bn of the sum was invalid for payment.
He also noted audit’s findings showed various infractions, including non-existent entities and unauthorised FX allocations, making these liabilities invalid.
Cardoso, however, assured that the country will soon be free of its $7bn foreign exchange (FX) backlog, as $2.3bn has already been paid to foreign airlines and other sectors, while only about $2.2bn currently remains unpaid.
He said, “When we came into the leadership of the Central Bank a few months ago, the issue of foreign exchange backlog was something that we met — obviously for something that had been accumulated over some time. It is very important as a sovereign nation to be able to keep your integrity intact, and as a bank, to be able to show that we consider obligations as obligations that must be met.
“Now, approximately $7bn was what we were told, and we looked at these and commenced the process of starting to pay. We were settling some that we believed were valid and due for payment, and this isn’t something we could just do in one shot or take a bit of time.
“Now, as we went along, we had reasons to believe that we needed to take a harder look at these obligations. So, we contracted Deloitte Management Consultants, to do a forensic of all these obligations and to tell us what was valid and what was not.
“We were committed to ensuring that we would pay all valid transactions and the result that came out of this was startling. We discovered that of the $7bn, roughly about $2.4bn had issues and had no business being there, and the infractions on that range from so many things, for example, not having valid important documents, and in some cases, even entities that did not exist, and in some cases, beneficiaries, account parties who had asked for exchange and got more than they asked for and some who didn’t even ask for any, got.
“Well, we’re not paying, if you don’t qualify. They are not valid. We have settled about $2.3bn and that applies to the airlines and a whole load of different entities spread throughout the economy.”
*Plans medium-term strategy to fix forex challenges
Cardoso also revealed a plan by the apex bank to carry out what he called a Medium-Term Strategy to fix Nigeria’s forex challenges.
“In the short term, we have put in significant work, and we are witnessing results in improving the market structures and removing all the bottlenecks stifling the supply of FX into the country.”
“We have addressed the challenges to remittance flows, reduced the ability of banks to hold on to positions, and more importantly, we now have the export proceeds from the national energy sector flowing back through the Central Bank. We have also initiated several short-term measures to make naira assets attractive to foreign investors”.
“The eventual stability of the Naira will be driven by our ability to address the fundamental issues affecting our economy…bring inflation under control and promote the growth of Nigerian businesses such that we eventually export much more than we consume as a nation.”
On September 26, 2023, the CBN governor, had said the apex bank was working on settling the $7bn FX backlog liabilities.
The apex bank, which began clearing the debt in November 2023, recently released $500m to various sectors to address the backlog of verified FX transactions.
On January 30, 2024, the CBN said it had concluded the payment of all verified FX claims by airlines with an additional disbursement of $64.44m to the concerned foreign aviation firms.
