CBN data reveals deepening current account strain despite rising foreign reserves

Nigeria’s external financial position faced significant headwinds in the final stretch of 2025 as the national balance of payments surplus narrowed to $2.67 billion. This performance, captured in the latest Central Bank of Nigeria data for the fourth quarter, represents a sharp decline from the $4.6 billion surplus recorded in the preceding quarter. While the nation maintained a net inflow of foreign currency, the diminishing margin highlights growing vulnerabilities in the country’s trade and income accounts compared to both the previous quarter and the nearly $5 billion surplus seen during the same period in 2024.

The primary driver of this contraction was a dramatic 65.52 percent plunge in the current account surplus, which settled at $1.4 billion. This erosion was fueled largely by a weakening goods account, where the surplus collapsed from $4.53 billion to $1.77 billion within three months. Total exports retreated to $13.36 billion as the energy sector struggled, headlined by a 20.54 percent drop in crude oil earnings and a 13.97 percent decline in refined petroleum exports. These falling revenues were compounded by a 24.93 percent spike in non-oil imports, which climbed to $8.77 billion, signaling intensified demand for foreign goods even as domestic production earnings waned

Beyond the trade of physical goods, Nigeria’s financial obligations to foreign investors added further pressure. The primary income account recorded a 47.30 percent increase in net out-payments, totaling $3.27 billion, as the country serviced higher dividend and interest payments. However, the services account offered a rare silver lining, with net outflows narrowing slightly to $3.32 billion thanks to reduced international spending on travel and communication.

A significant pillar of support during this period came from Nigerians abroad, as diaspora remittances surged to $6.21 billion. This growth in secondary income helped offset some of the trade deficits, with personal transfers alone accounting for $5.72 billion of the total. On the investment front, the financial account reflected a complex landscape of shifting investor sentiment. While foreign direct investment cooled to $1.11 billion, portfolio investment inflows more than doubled to $5.27 billion, suggesting that while long-term capital remains cautious, foreign interest in Nigerian financial assets saw a robust revival.

Despite the volatility in trade and the reduction in the overall surplus, Nigeria managed to grow its external buffers. The national reserves climbed nearly 7 percent over the quarter, ending December 2025 at $45.75 billion. This accumulation, bolstered by a narrowing of net errors and omissions in the reporting, provides a crucial cushion as the apex bank navigates a landscape defined by falling oil revenues and rising import costs.

SOURCE: NEWSSCROLL