The Role Of Central Bank Of Nigerian In The Management Of The Nations Foreign Debt

The Role Of Central Bank Of Nigerian In The Management Of The Nations Foreign Debt

Abstract

The central bank of Nigerian(C.B.N) started full- scale operation on 1st July 1959, and since its commencement like utmost of the central bank the world over, performs certain public and transnational functions one of which is the operation of foreign debt. So this design examines the part of CBN in the operation of foreign debt.

A lot of problems gulfed the central bank of Nigeria which trying to carry out this function ranging from shy reserves to over adding significances bills. The study which isn’t one outgrowth of empirical exploration examines the different measures espoused by the central bank of Nig at different times to insure effective operation of external debt.

The methodology employed revolves round the use of secondary data considerably round the use of lower significance.

still, the magnific increase in the volume of external deprecation in the value of the naira through the exchange request.

Eventually, the debt- cataloging programmer of the central bank of Nigeria will be pointless if the import base isn’t developed to guarantee increased earning of foreign exchange.

Table Of Contents

design title

blessing runner

fidelity

ACKNOWLEDGEMENT

TABLE OF CONTENTS

ABSTRACT

CHAPTER ONE

preface

PROBLEM description

objects OF THE STUDY

thesis NULL thesis

CHAPTER TWO

REVIEW OF RELATED LITERATURE

THE Alternate league FOREIGN EXCHANGE request

DEBT CONVENTION PROGRAMMER

CHAPTER THREE

exploration METHODOLOGY

system

PROCEDURE

CHAPTER FOUR

FINDINGS

PROBLEMS ENCOUNTERED IN CARRYING OUT operation FUNCTIONS AND result.

CHAPTER FIVE

CONCLUSIONS

SUMMARY

BIBLIOGRAPHY

CHAPTER ONE

preface

The central bank’s responsibility for the operation of the nation’s external debt started at the commencement of the bank itself in July 1959 when it took off Nigerian’s share of the sterling means of the nations external reserves in the bank in 1962. The responsibility was enlarged through it’s two comes prudent banks the bank of England and the civil reserves bank of new York.

The bank invested the external reserves largely in sterling and in bone securities of not further than 10- times maturity.

The primary consideration in its choice of investment were liquidity, security and yield.

The central problem

The central problem of managing reserves during this period was one of conservation of acceptable reserve to meet Nigerian’s external obligation for case, in 1960 Nigeria’s external means were acceptable to meet her import bill for9.5 months at the average rate of N3.6 m per month. But with the increase in her external means to N197 million in 1963 only4.3 months of significances could be safety covered.

Restriction were assessed in the third/ quarter of that time to reduce significances and by 1967 the average yearly bill was forced down to N37 million.

But the reserves declined during the same period and at N120m could finance roughly 3 months significances

Again in 1977 as a result of means at the morning of 1977 declined to a position, which could only buy to a position, which could only buy some four months significances at the end of that time.

Nigeria experience multiple increase in external reserves from N37.3 m in December of 1972 to N3.38 m in December 1975 as a result of oil painting reserves.

This called for a new strategy in the operation of external reserves.

There were also increase in misgivings following glowing affectation and devaluation in reserve currencies. These represented new challenges to the central bank which must now manage the enlarge external reserve to

1. insure relative stability in the purchasing power of the reserves.

2. Minimize losses arising from currency change.

3. Explore new openings for increased earnings previous to this period of inordinate reserves, the problems of trying to invest the reserves noway caused important concern because the bank had no fat to invest.

1. Okigbo PNC Nigeria fiscal system, structure and growth( Long man Limited, Burnt Hill, Harlow, Essex,U.K. 1981.

The available reserves were invested in sterling and bone means. Sterling demonstrate weakness, and a result of its devaluation in November 1967 Nigeria lost a reasonable quantum of plutocrat in sterling value.

But Nigeria has formerly perfected sterling guarantee agreement with the United Kingdom in September 1969. With this agreement Nigeria was to keep an agreed proportion of her total reserves in sterling. This agreement was renewed according to the proportion of stating effects and has been reduced to 48 percent. The guarantee latterly change from United states bone to baskets of currencies of countries comprising United Kingdom and our other trading mates. With the decaying of pound sterling as reduced by its declining value since June 1972, Britain changed the agreement in1974, sterling which until 1973 reckoned for some 59 of Nigeria’s total external reserves come fully unstable and between 1971 and 1976 its deprecation against other major currencies rose to 48 percent incontinently the central bank reduced its sterling effects from37.9 percent total external reserves in in 1971 to28.2 percent in 1976, and this was invested in United State bone securities which raised effects in bone from10.3 percent in 1971, to some 44percent of Nigerians total external reserves in 1976.

2. Central Bank of Nigeria Economic and finance Review 1985- 1988 Daily Times of Niger’s ltd Business Times 1985- 1988.

PROBLEM description

At the macro position, external debt operation is a pivotal tool of all profitable operation to the extent that a sustainable balance of payment position over the long form enhances operation overall economics.

Debt operation also becomes an important acclimate of balance of payments arises an effective debt operation strategy can help not only in restoring the balance of payments to equilibrium but also in achieving the overall macro profitable objects of the frugality.