The Central Bank of Nigeria (CBN) recently released a summary note on the country’s Balance Of Payment (BOP) for Q3-18. The result showed that the Nigerian economy recorded an unfavourable BOP as the overall balance slumped into a deficit of $4.5mn (vs. a surplus of $504.0mn in Q2-18) for the first time since Q3-16.
A dissection of the BOP data into its various components showed that the current account balance plunged to a deficit of $3.1bn (relative to a surplus of $4.5bn in Q2-18), majorly driven by a 70.5% increase in the payments for import of goods to US$14,1bn (especially non-oil products) which more than offset the 2.8% increase in export earnings. Similarly, the financial account also underperformed as net financial liabilities skyrocketed from $2.6bn in Q2-18 to $10.7bn on a 9.6% depletion in external reserves and decline in foreign portfolio inflow from US$4.2bn in Q2-18 to $1.8bn in Q3-18.
The report implies that in addition to the fiscal deficit, Nigeria slipped into a twin deficit in Q3-18 in contrast to a more desirable fiscal and current account surplus. Nevertheless, higher payments for the imports of goods in Q3-18 was predicated majorly on the importation of a one-off extraordinary item (import of a production vessel) which is unlikely to recur in the following quarter.