Guardian Nigeria
Nigeria’s letter of credit payments has plummeted by 63 per cent in the first quarter of 2024, compared to the same period in the previous year, according to the international payments data of the Central Bank of Nigeria.
The total letter of credit payments, made via official channels for Q1 2024, was $204.47m, reflecting a shortfall of $344.75m compared to Q1 2023 of $549.22m.
A breakdown of the payments shows that January 2024 recorded a significantly lower payment of $58.33m, followed by an increase in February 2024 to $102.6m, but still far below the corresponding month in 2023. The trend continued in March 2024, with payments dropping to $43.54m.
In the period under review, Nigeria’s foreign exchange reserves depleted towards the end of Q1 2024.
The CBN Governor, Yemi Cardoso, reportedly said: “The decreasing reserves were primarily due to debt repayments and other standard financial obligations, rather than efforts to defend the naira.”
In the period under review, the CBN started selling dollars to Bureau De Change operators (BDCs) in February 2024. The apex bank made another sale in March but reduced the allocation by 50 per cent and sold FX at a rate of N1,251/$1.
In addition, Nigeria spent about $1.12 billion on foreign debt service payments, an increase of 39.7 per cent.
