Foreign exchange inflows surge, reserves hit 13-year high, and 32 banks meet recapitalisation target amid sweeping reforms….
Nigeria’s central bank has sharply reduced its controversial Ways and Means financing, cutting the figure to N2.84 trillion from the N26.95 trillion inherited by the current administration one of the most dramatic fiscal adjustments in recent years.
Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, disclosed the development at the Monetary Policy Forum in Abuja, where he outlined the impact of a broad set of reforms aimed at restoring macroeconomic stability.
Cardoso said his team met a challenging economic landscape on assumption of office but moved quickly to implement decisive measures designed to rebuild confidence, enforce discipline, and stabilize the financial system.
According to him, curbing Ways and Means financing, a practice where the central bank lends directly to the government was a critical first step. The figure dropped to N3.51 trillion by December 2024 before declining further to N2.84 trillion by January 2026.
The move, he explained, not only restored compliance with legal limits but also reinforced the independence of the central bank and signaled a clear break from past practices.
FX reforms drive inflows and stability
On the foreign exchange front, Cardoso said reforms introduced by the apex bank have begun to yield tangible results, particularly in boosting liquidity and restoring market confidence.
Diaspora remittances have emerged as a standout performer, with monthly inflows through official channels tripling from about $200 million to $600 million. The CBN is targeting $1 billion in monthly remittances by the end of 2026, pointing to what the governor described as a structural shift rather than a temporary trend.
He added that improved settlement systems and tighter regulatory controls have further strengthened FX inflows, while reforms in market operations have helped narrow the gap between official and parallel market rates to below 2 percent.
Reserves hit strongest level in over a decade
Nigeria’s external reserves have also rebounded strongly. Gross reserves rose from $38.34 billion in February 2025 to $50.12 billion in February 2026, a more than 30 percent increase and the highest level recorded in 13 years.
Net external reserves saw an even more dramatic jump, climbing from $3.99 billion at the end of 2023 to $34.80 billion by the end of 2025.
The balance of payments has similarly improved, recording a surplus of $4.59 billion in the third quarter of 2025, compared to a deficit earlier in the year.
Banking sector strengthens
Cardoso also highlighted progress in the banking sector, revealing that 32 banks have already met the CBN’s revised capital requirements under its recapitalisation programme.
He said the development enhances the sector’s resilience and positions financial institutions to support long-term investments and economic growth, particularly as Nigeria pursues its ambition of becoming a $1 trillion economy.
Reform momentum continues
Despite the gains, the CBN governor cautioned that the reform journey is not yet complete. The next phase will focus on consolidating progress, including pushing inflation toward single-digit levels, maintaining exchange rate stability, and strengthening reserve buffers through sustainable inflows.
He emphasized that achieving these goals will require continued coordination between monetary and fiscal authorities, as well as disciplined policy execution.
Fiscal authorities back reforms
Also speaking at the forum, Minister of Finance and Coordinating Minister of the Economy, Wale Edun, underscored the importance of interest rates in managing inflation.
He noted that while high rates can slow economic activity by increasing borrowing costs for government, businesses, and households, they remain a necessary tool in stabilizing prices.
Edun added that as inflation eases and reforms take hold, there is a reasonable expectation that interest rates will gradually decline provided macroeconomic conditions continue to improve.
Both officials agreed that sustaining Nigeria’s economic recovery will depend on strong collaboration across institutions, consistent policy direction, and a shared commitment to long-term stability.
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