Higher Oil Earnings, FX Reforms, Diaspora Remittances, Dangote Refinery Expansion to Boost Reserves — CBN
Nigeria’s external reserves are projected to rise to $51.04 billion in 2026, up from an estimated $45.01 billion in 2025, according to a new outlook released by the Central Bank of Nigeria (CBN).
The projection is contained in the Bank’s Macroeconomic Outlook for Nigeria, 2026, titled “Consolidating Macroeconomic Stability Amid Global Uncertainty,” published on Tuesday.
According to the report, the anticipated increase in reserves will be driven by easing pressure in the foreign exchange market, supported by higher oil revenues, planned sovereign bond issuances, and stronger inflows from diaspora remittances.
“The external reserves are projected at $51.04bn in 2026, compared with $45.01bn in 2025,” the report stated.
“The expected improvement reflects reduced pressure in the FX market arising from increased oil earnings, sovereign bond issuance, and sustained diaspora remittance inflows.”
The apex bank added that Nigeria’s refining capacity will play a growing role in strengthening external buffers. It cited the Dangote Refinery’s expansion of its nameplate capacity to 700,000 barrels per day from 650,000 bpd in 2025, with plans to scale up to 1.4 million bpd in the medium term, as a key support factor for reserve accumulation.
As of Monday, December 29, 2025, Nigeria’s external reserves stood at $45.45 billion, reflecting several days of steady inflows.
FX market reforms, local refining to ease pressure
On the foreign exchange market, the CBN said ongoing reforms are expected to improve transparency and efficiency, narrow the premium between official and parallel market rates, and help maintain exchange rate stability.
The Bank also noted that increased domestic refining capacity will reduce the country’s demand for foreign exchange used for fuel imports, further easing pressure on reserves.
Overall, the CBN described the outlook for 2026 as “cautiously optimistic,” citing the impact of reforms introduced since 2023 and stronger coordination of macroeconomic policies.
According to the Bank, the economy is expected to stabilise further in 2026, with modest growth acceleration, moderating inflation, and a more stable FX market.
Growth outlook and monetary policy stance
The report projected improved performance in the non-oil sector, although it acknowledged that structural challenges remain.
It noted that after an extended period of monetary tightening aimed at curbing inflation, the CBN eased its policy stance in September 2025 to support domestic investment and economic growth.
The easing, the Bank explained, was prompted by continued disinflation, sustained exchange rate stability, and improved liquidity conditions.
The CBN said Nigeria’s external buffers strengthened in 2025 due to increased remittance inflows through International Money Transfer Operators (IMTOs), steady oil receipts, and rising non-oil exports, all of which supported naira stability.
The Bank also reported significant progress in its transition toward a full-fledged inflation-targeting framework, backed by improved forecasting tools, enhanced modelling, and clearer policy communication.
In the banking sector, the CBN said notable progress has been recorded in the ongoing recapitalisation exercise, with many banks already meeting new capital requirements.
“As a result of coordinated macroeconomic policies and reform impacts, the Outlook projects a more stable and resilient Nigerian economy in 2026,” the report said.
Inflation expected to ease further
On inflation, the CBN projected that headline inflation will continue to slow, falling to 12.94 per cent in 2026 and further to 10.75 per cent in 2027.
The Bank said the outlook is anchored on stability in the foreign exchange and energy markets, the lagged impact of previous interest rate hikes, and improved policy coordination.
According to the National Bureau of Statistics (NBS), headline inflation fell to 14.45 per cent in November 2025, down from 16.05 per cent in October, although the Consumer Price Index rose marginally month-on-month to 130.5 points.
The CBN said declining food prices and lower petrol costs, driven by increased competition in the downstream oil sector are expected to support further disinflation.
Improved agricultural output, enhanced security in food-producing regions, and favourable weather conditions are also expected to help moderate food inflation.
Fiscal outlook and risks
On fiscal performance, the CBN said the 2026 outlook is broadly positive, supported by improved crude oil production and the phased implementation of the Nigeria Tax Act, 2025, which is expected to strengthen non-oil revenue mobilisation.
However, it warned of downside risks, including a potential drop in global oil prices, lower-than-expected oil output, rising debt service costs, and pre-election spending pressures.
The Bank also cautioned that low tax compliance, weak tax awareness, and gaps in administration could limit the effectiveness of revenue projections under the new tax regime.
Concerns over banking sector risks
In the financial sector, the CBN flagged rising non-performing loans (NPLs) as a potential risk to banking system stability.
“Rising NPLs pose a direct threat to banks’ profitability, credit availability, and overall risk-bearing capacity,” the Bank said.
While noting improvements in capital adequacy and liquidity ratios, it warned that unexpected macroeconomic shocks, FX illiquidity, or higher credit losses could strain banks’ balance sheets and disrupt financial intermediation.
Commenting on the outlook, Deputy Governor (Economic Policy), Muhammad Sani Abdullahi, said the Bank remains committed to its mandate.
“The Bank will continue to pursue price stability while promoting sustainable growth and economic resilience,” he said, adding that policies will remain data-driven, timely, and supportive of macroeconomic stability.
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