Nigeria has seen significant improvement in the overall balance of payments, recording a surplus of $2.80 million in the fourth quarter (Q4) of 2018, compared to a huge deficit of $4.54 billion in the previous quarter.
When compared with the corresponding period of 2017, the country recorded a surplus of $6.2 billion, according to the fourth quarter 2018 brief on balance of payments statistics released on Tuesday by the Central Bank of Nigeria (CBN).
Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited, said on Tuesday that surplus balance in the balance of payment is positive for the Nigerian economy as it would help the stability in the foreign exchange.
He explained that the increase in exports and decrease in imports is responsible for the positive balance of payment.
“The balance of payment is vulnerable to the movements in the crude oil and gas market as crude oil and gas exports accounted for about 93 percent of the total exports as at Q4 2018,” Akinwunmi said.
A balance of payment (BOP) is the record of all economic transactions between the residents of a country and the rest of the world in a particular period of time. When a country’s BOP is in surplus, it means that such country is exporting more than it is importing.
Nigeria’s export earnings rose by 2.8 percent to $16.65 billion in Q4 2018 when compared with $16.2 billion in Q3 2018. It also indicated an increase of about 27.6 percent when compared to $13.05 billion in the corresponding period of 2017.
Earnings from crude oil and gas, which accounted for 93.8 percent of total export earnings during the review period, increased by 2.1 percent to $15.62 billion in Q4 2018 when compared with $15.29 billion in the preceding quarter. Also, earnings from non-oil and electricity exports increased by 15.0 percent to $1034.59 million in Q4 2018 compared with $899.36 million in the preceding quarter.
Available data from the CBN showed that payments for import of goods (fob) to the economy in the review period decreased significantly by 20.7 percent to $9.86 billion below the level of $12.44 billion recorded in the preceding quarter. This was largely as a result of 19.9 percent decrease in the imports of non-oil products.
Nigeria’s current account balance (CAB) improved to a surplus of $1.10 billion in Q4 2018, from a deficit of $1.54 billion in Q3 2018. The financial account balance indicated a net acquisition of financial assets of $2.33 billion in the review period as against a net incurrence of financial liabilities of $4.61 billion recorded in the preceding period.
The current account indicated a positive outcome during the review period, recording a surplus of $1.10 billion as against a deficit of $1.54 billion in the previous quarter. This development was largely attributable to the decrease in imports and payments on income (net).
According to the report, the surplus in the Goods Account increased significantly to $6.79 billion in Q4 2018, from surpluses of $3.76 billion in the preceding quarter and $5.47 billion recorded in the corresponding period of 2017.
Direct Investments inflow decreased by 28.3 percent to $314.44 million in Q4 2018 compared with $438.84 million in the preceding quarter of 2018. It, however, indicated a decline of 67.2 percent compared to $959.52 million in the corresponding period of 2017.
Portfolio Investments inflow to the economy decreased significantly to $1.38 billion in Q4 2018, from $1.79 billion and $3,787.16 million in the preceding quarter and the corresponding period of 2017, respectively.
However, other investment liabilities increased to $1.42 billion when compared with a reversal of $3.07 billion recorded in the preceding quarter.
The report revealed that net out-payments for services during the review period increased by 16.5 percent to a deficit of $8,287.57 million when compared with the level recorded in Q3 2018. When compared with the corresponding period of 2017, it indicated a much higher increase of about 76.9 percent.
HOPE MOSES-ASHIKE
