Nigeria’s foreign exchange reserves are expected to rise sharply to $51.04 billion by 2026, underscoring improving macroeconomic conditions as inflation slows and pressures in the FX market ease, the Central Bank of Nigeria (CBN) has projected.
The outlook 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 grow from about $45 billion in 2025 on the back of stronger FX inflows and ongoing market reforms.
Official data show that Nigeria’s external reserves stood at $45.45 billion as of December 29, 2025, after several days of steady accretion.
According to the CBN, the expected build-up in reserves will be driven by higher oil earnings, planned sovereign bond issuance and increased diaspora remittances, alongside reduced pressure in the FX market.
“The external reserves are projected at $51.04 billion in 2026, compared with $45.01 billion in 2025,” the bank said. “This outlook reflects anticipated improvements in oil receipts, FX market stability and capital inflows.”
The CBN also highlighted the role of domestic refining in easing FX demand, noting that the Dangote refinery is expected to expand its nameplate 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. The expansion, the bank said, would reduce Nigeria’s reliance on imported fuel and support reserve accumulation.
FX market reforms, inflation outlook
The apex bank said reforms in the FX market are expected to enhance transparency and efficiency, narrow the gap between the official market and Bureau de Change rates, and support exchange rate stability. Increased domestic refining capacity is also expected to lower FX demand for fuel imports.
On inflation, the CBN projected a further slowdown 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 declined for consecutive 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 to 130.5 points in November from 128.9 points in October on a month-on-month basis.
“Inflation is expected to continue its downward trend in 2026,” the CBN said, citing stability in the FX and energy markets, the lagged impact of previous interest rate hikes and improved policy coordination. The expected moderation, it said, would be driven by easing food prices and lower premium motor spirit costs due to increased competition in the oil midstream sector.
The bank added that improved security in food-producing regions, higher agricultural output and favourable weather conditions are expected to accelerate the decline in food prices.
Policy stance and fiscal risks
The CBN said monetary policy in 2026 would remain flexible, with adjustments to key instruments such as the Monetary Policy Rate and Cash Reserve Ratio to balance price stability with economic growth.
Monetary conditions are expected to be relatively loose in 2026, reflecting improved macroeconomic stability in 2025. However, the bank noted that external shocks, fiscal operations and exchange rate movements would continue to influence monetary aggregates.
On the fiscal front, the CBN said the 2026 outlook 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 mobilisation.
However, it warned that risks remain, including a sustained fall in global oil prices below budget benchmarks, weaker-than-expected oil production, rising debt service obligations and potential fiscal pressures linked to pre-election spending. The bank also cautioned that low tax compliance and gaps in tax administration could undermine non-oil revenue projections.
Banking sector caution
The CBN expressed concern about rising non-performing loans in the banking sector, warning that deteriorating asset quality could threaten profitability, credit expansion and financial stability.
While recent improvements in capital adequacy and liquidity ratios provide buffers, the bank said these could be eroded by adverse macroeconomic shocks, increased credit losses or FX illiquidity, potentially weakening confidence across the financial system.
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