CBN sees FX reserves topping $51bn by 2026 as inflation cools, naira pressures ease

Nigeria’s external reserves are projected to climb to $51.04 billion by 2026, reflecting strengthening foreign exchange inflows and improving macroeconomic stability, the Central Bank of Nigeria (CBN) has said.

The projection is contained in the CBN’s Macroeconomic Outlook for Nigeria, 2026, titled Consolidating Macroeconomic Stability Amid Global Uncertainty, released on Tuesday. The apex bank expects reserves to rise from about $45 billion in 2025 as pressures in the foreign exchange market continue to ease.

Data from the CBN show that Nigeria’s external reserves stood at $45.45 billion as of Monday, December 29, 2025, after several days of steady accretion.

According to the bank, the anticipated growth in reserves will be driven by higher oil earnings, planned sovereign bond issuances, and increased diaspora remittances. It also pointed to reduced stress in the FX market following ongoing reforms aimed at improving transparency and efficiency.

“The external reserves are projected at $51.04 billion in 2026, compared with $45.01 billion in 2025,” the CBN said. “This outlook is underpinned by reduced pressure in the FX market, rising oil receipts, sovereign bond issuance, and stronger diaspora remittance inflows.”

The CBN added that the expansion of the Dangote refinery would further support reserve accumulation. The refinery is expected to increase capacity from 650,000 barrels per day in 2025 to 700,000 bpd in 2026, with a medium-term target of 1.4 million bpd, reducing Nigeria’s reliance on imported fuel and the associated FX demand.

FX reforms, inflation outlook

The apex bank said continued reforms in the foreign exchange market are expected to narrow the gap between the Nigerian Foreign Exchange Market and Bureau de Change rates, helping to stabilise the naira. Increased domestic refining capacity is also expected to cut foreign exchange demand for fuel imports.

On inflation, the CBN projected a further deceleration in headline inflation to 12.94 per cent in 2026 and 10.75 per cent in 2027, from an estimated 21.26 per cent in 2025.

Data from the National Bureau of Statistics show that inflation has been declining for several months. Headline inflation fell to 14.45 per cent in November 2025 from 16.05 per cent in October, although the Consumer Price Index rose month-on-month to 130.5 points from 128.9 points.

“Inflation is expected to continue its downward trajectory in 2026,” the bank said, attributing the outlook to stability in the FX and energy markets, the lagged effects of earlier monetary tightening, and improved policy coordination. The moderation is expected to be driven largely by easing food prices and lower premium motor spirit costs, supported by increased competition in the oil midstream sector.

The CBN also expects improved security in major food-producing areas, stronger agricultural output, and favourable weather conditions to accelerate the decline in food prices.

Policy stance and fiscal risks

The bank said monetary policy would remain flexible in 2026, with adjustments to the Monetary Policy Rate, Cash Reserve Ratio and other instruments to balance price stability with growth objectives.

While monetary conditions are expected to be relatively loose in 2026 due to improved macroeconomic stability, the CBN noted that external shocks, fiscal operations and exchange rate movements would continue to influence monetary aggregates.

On the fiscal side, the CBN said the outlook for 2026 is broadly positive, supported by higher crude oil production and the phased implementation of the Nigeria Tax Act, 2025, which is expected to strengthen non-oil revenue.

However, it warned that downside risks remain, including a sustained fall in global oil prices below budget benchmarks, weaker oil production, rising debt service costs, and potential fiscal slippages linked to pre-election spending. The bank also cautioned that low tax compliance and weaknesses in tax administration could undermine non-oil revenue projections.

Banking sector warning

The CBN expressed concern over rising non-performing loans, warning that deteriorating asset quality could weaken banks’ balance sheets and strain financial stability.

“Rising NPLs pose a direct threat to banks’ profitability, credit availability, and overall risk-bearing capacity,” the bank said, adding that although capital adequacy and liquidity ratios have improved, they remain vulnerable to adverse macroeconomic shocks that could erode buffers and undermine confidence in the banking system.