CBN reveals flaw in JP Morgan foreign reserves report

The Central Bank of Nigeria (CBN) has rubbished a report by JP Morgan on the status of Nigeria’s foreign reserves which sparked concerns over forex liquidity in the country.

Ripples Nigeria reported on Wednesday that JP Morgan reported Nigeria’s foreign reserves stood at $3.7 billion as of December 2022 and not $35.08 billion as disclosed by the CBN.

Following the mixed reactions that followed the report, CBN’s Director of Monetary Policy Department, Hassan Mahmud, on Thursday, said the purpose of JP Morgan was to either rouse market sentiments or to mislead the public.

“We also read the JP Morgan numbers in-house and we didn’t panic over that. That’s not the first time we see people, institutions reeling out numbers; they must have their intentions to do that, whether to rouse market sentiments or to mislead the public,” Mahmud said during an interview with Nancy Umeh on AIT’s Moneyline business show.

“But the central bank has tried as much as possible to be transparent. What I will say about those numbers is that it is just funny in the sense that number one, reserves like any account balance, is a flow; there are changes that go within it at any particular time.

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“Two, even if you have outstanding liabilities, you don’t mark the outstanding liabilities to market on a day and say this is your net balance.“

Explaining the flaw in the JP Morgan report, Mahmud stated that: “I can have $20 million in my account and I am owing someone maybe $13 million that is supposed to be paid in 2027; you can’t come in 2023 and say if I remove that $13 million, your money is $7 million or you are having $7 million.

“Now, I am not having $7 million, I am having $20 million. Before I took a facility of $13 million, I know I will get $17 million in the next three years so I can pay you back.

“But for you to come and tell me that no, your balance is $7 million and you can’t pay back in three years; it’s just putting it out of context.

“I don’t know how they did their calculations, and I don’t have any information about that, but we also saw those numbers that came out.”

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