The Central Bank of Nigeria (CBN) has revealed that it has a debt of $7.5 billion to JP Morgan and Goldman Sachs as stated in its consolidated financial statements which have been published for the first time in seven years due to an ongoing investigation.
The bank, in a statement released on its official website, further disclosed that it holds an additional liability of $6.3 billion in foreign currency forwards with undisclosed parties.
“The Group entered into a securities lending agreement with Goldman Sachs and J. P. Morgan and as part of the agreement, the Group pledged its holdings on foreign securities in return for cash. The cash received from Goldman Sachs is N0.23 trillion ($500 million), 2021: N0.22 trillion ($500 million), and JP Morgan N3.23 trillion ($7 billion), 2021: N3.05 trillion ($7 billion) is recognized in other foreign securities.”
– Central Bank of Nigeria
These revelations have emerged following criticisms and the subsequent dismissal of the CBN Governor, Godwin Emefiele, by President Bola Tinubu in June 2023. A financial watchdog has been appointed to scrutinize the bank’s operations in response to concerns about its management.
The ongoing forensic audit at the bank is a component of the ‘intended reforms in the financial sector of the economy,” as stated by Tinubu when he announced the investigation.
Folashodun Shonubi, one of Emefiele’s deputies, is presently serving as the acting central bank governor. This arrangement will remain in place until the investigation and subsequent reforms are concluded.
In addition, as part of President Tinubu’s financial management reforms, the president eliminated the currency controls maintained by the central bank which had previously artificially propped up the Naira’s value. This change has caused the Naira to devalue by nearly 40% against the dollar.
Tinubu is also aiming to institute a unified foreign exchange rate that would amalgamate the official and black-market exchange rates.
During Emefiele’s tenure as Governor, CBN adhered to a multi-tiered exchange rate system, with a prominent focus on a tightly regulated official rate. Detractors argue that this approach limited the availability of dollars for numerous businesses and individuals thereby spurring demand in the unregulated black market.
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