CBN begins clearing forex forwards backlog

Barely 10 days after, the Central Bank of Nigeria (CBN) may have begun to implement the promise of President Bola Tinubu to clear the estimated $7 billion outstanding foreign exchange obligations of the Federal Government, on foreign currency forwards contracts owed to banks.

Reuters quoted the spokesperson of the apex bank, Dr. Isah Abdulmumin, to have confirmed the development yesterday adding that  banking sources said an initial payment of $1 billion had been made.

President Tinubu, while declaring open the 29th edition of the Nigerian Economic Summit in Abuja last week Monday, stated: “All foreign exchange future contracts will be honoured by this government. I assure you we have a line of sight to the foreign exchange we need to refloat this economy, and we will get it.”

The President who allayed the fears of the business community, assured them that crucial plans are underway to improve foreign exchange liquidity. He said his administration will honour every legitimate contract with respect to the nation’s foreign exchange obligations

Speaking to Reuters, Abdulmumin said, “The CBN has started paying the FX backlogs to banks. So far, 14 banks have been paid.” but declined to give the amount or name the banks.

But according to Reuters, four banking sources said the banks were paid varying amounts totalling about $1 billion and that the payments would continue in the next few weeks.

It added that while a few of the banks were paid the entire amount owed, others got as much as 80% of backlog.

CBN Governor, Yemi Cardoso, said at the Economic Summit that clearing the backlog was a priority but gave no timeline for how long it would take.