By Chinwendu Obienyi
The Central Bank of Nigeria (CBN) recorded an increase in international payments during the first quarter (Q1) of 2024, reaching $1.61 billion.
According to data obtained from the apex bank’s website, this represents a 22.7 per cent increase compared to $1.31 billion recorded in the fourth quarter (Q4) of 2023. Also, the increase reflects significant shifts in various payment categories.
The data also revealed that higher foreign debt service and payments increased by 18.7 per cent to $1.12 billion whilst direct remittances saw a substantial increase of 127 per cent to $282.62 million, reflecting increased diaspora contributions or other factors driving individual remittances into the country.
Conversely, payments for letters of credit experienced a decline of 15.6 per cent to $204.47 million, with analysts attributing the decline to changes in trade dynamics or reduced reliance on letters of credit for international transactions.
Notably, debt service payments accounted for 69.7 per cent of total CBN international payments in Q1 2024, explaining the large drawdowns on the FX reserves witnessed in the near-recent past.
Reacting to the data, analysts at Cordros Research said, “We highlight that the higher debt service can be linked to interest payments on commercial (Eurobond), bilateral and multilateral loans. Looking forward, we expect FG’s external debt service to remain elevated, owing largely to the country’s high external debt, underpinning increased international payments by the CBN.
This is likely to sustain the depletion of the external reserves in the near term, barring any significant inflows from external trade and international borrowings”.