Nigerian Bank Current Account balance declines by 26.3% in Q2

Date:

cbn-logoThere are indications that a combination of factors including higher import bills and lower export earnings have begun to take their tolls on the nation’s current account balance, which fell by 26.3 per cent in the second quarter of the year.
According to a Central Bank External Sector Development Report, for the second quarter of the year posted on the CBN website last week, the estimated current account balance, which was put at $5.01 billion in the period under review declined by 26.3 per cent from the level recorded in Q12013.

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This development was traced to the higher import bills and lower export earnings arising from the decline in crude oil production from 2.05 million barrels per day (mbpd) in Q1 2013 to 1.93 mbpd on account of production shut-ins and crude oil theft.
The report showed that aggregate imports increased by 21.3 per cent from $11.30 billion recorded in the preceding quarter to $13.71 billion. It, however, declined by 11.7 per cent when compared with the level recorded in the corresponding quarter of 2012.
“Aggregate exports declined by 6.4 and 8.8 per cent, respectively, when compared with the preceding quarter and corresponding quarter of 2012. However, the deficit in the income account narrowed significantly from $4.97 billion and $6.00 billion recorded in Q1 2013 and Q2 2012, respectively to $2.95 billion owing to lower repatriation of dividends and distributed branch profits by foreign investors.

“The deficit in the services account also narrowed relative to Q2 2012 but widened when compared with the level in Q1 2013, while the surplus in the current transfers account increased when compared to the levels recorded in the preceding quarter and the corresponding period of 2012,” the report stated.
In a related development, estimated trade balance within the same period also declined from $9.80 billion and $6.47 billion in Q1 2013 and Q2 2012, respectively to $6.34 billion in Q2 2013. This was attributed to the decline in aggregate exports proceeds and surge in imports.

According to the apex bank’s report, aggregate exports declined by 6.4 and 8.8 per cent, respectively when compared with the levels in the preceding quarter and the corresponding quarter of 2012 to $21.16 billion in the review period. Further analysis showed that aggregate imports increased by 11.6 per cent from $11.30 billion in Q1 2013 to $13.71 billion in the review period but declined by 21.3 per cent relative to the $15.51 billion recorded in Q2 2012.
The quarterly report also showed that aggregate foreign capital inflows stood at $7.79 billion as against $7.58 billion and $4.53 billion recorded in Q1 2013 and Q2 2012, respectively.

“Of the total capital inflows, portfolio inflows remained dominant and accounted for 83.7 per cent of the total, while FDI inflows accounted for the balance. Further analysis revealed that FDI inflows at $1.47 billion, increased from $1.29 billion and $0.83 billion recorded in Q1 2013 and Q2 2012, respectively, while estimated portfolio investment inflow declined by 4.4 per cent from $6.82 billion in Q1 2013 to $6.52 billion in Q2 2013, but increased significantly over the level recorded in Q2 2012.
The continued dominance of portfolio investment in aggregate foreign capital inflows suggests the need to put in place a durable framework for managing short-term capital inflows.

 

 

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Babatunde Akinsola
Babatunde Akinsolahttps://naija247news.com
Babatunde Akinsola is aNaija247news' Southwest editor. He's based in Lagos and writes on the Yoruba Nation political issues, news and investigative reports

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