Nigeria: CBN Governor Cardoso Tackles FX Backlog and Emphasizes Inflation Control

The Governor of the Central Bank of Nigeria (CBN), Mr. Yemi Cardoso, has affirmed that the central bank is making significant progress in addressing the foreign exchange (FX) backlog, amounting to $7 billion, which was inherited from the previous administration. Speaking at the 2024 Nigerian Economic Summit dinner in Abuja, Cardoso highlighted the urgency of resolving this issue to restore confidence among international investors and maintain Nigeria’s financial obligations.

“We were faced with pressing demands and unresolved issues,” Cardoso stated. “However, it was clear that addressing the FX backlog was critical to demonstrating that the CBN would meet its commitments. As we began the process of verifying these claims, we identified some discrepancies. While some claims remain unverified, we are actively working on resolving them.”

Cardoso added that the CBN has now completed the initial phase of addressing the backlog and is moving into the second phase, focusing on verifying and settling outstanding claims. “We’ve successfully concluded stage one, and we are entering stage two to verify and address the remaining claims,” he explained.

Inflation Control: A Key Priority

In addition to the FX backlog, Cardoso underscored the importance of controlling inflation for the stability and growth of Nigeria’s economy. He reiterated that the CBN is committed to keeping inflation under control, as unchecked inflation could hinder investment, reduce purchasing power, and negatively impact the productive sectors of the economy.

“Taming inflation is key to economic stability,” Cardoso remarked. “High inflation reduces purchasing power and deters investment. Businesses depend on consumer spending, and when inflation spirals, it curtails this. By controlling inflation, we create a more favorable environment for economic growth and productivity.”

Cardoso further noted that while balancing inflation control with interest rates can be challenging, managing inflation effectively will eventually lead to lower interest rates, making it easier for businesses to thrive. “As inflation moderates, interest rates will follow suit, providing relief to the productive sector and fostering economic growth,” he concluded.

The CBN’s dual focus on clearing the FX backlog and managing inflation is seen as vital for boosting investor confidence and promoting long-term economic stability in Nigeria.