By Dipo Olowookere

There is an unease among observers of the Nigerian economy over the fast rate the nation’s external reserves are declining in recent times.

Recall that last month, Business Post raised an alarm over the issue and projected that it was only a matter of few days before the reserves fall below $38 billion and hit the $37 billion region.

Days after our report, the account, which holds foreign earnings generated by Nigeria as well as issued Eurobonds, has reduced and as at the close of business on Monday, February 10, 2020, what is left is about $37.4 billion, going by data obtained by Business Post from the Central Bank of Nigeria (CBN).

It was observed that the reserves went down to its present level from $37.6 billion last Friday and $37.7 billion last Thursday.
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As at January 31, 2020, what was held in the account was $38.0 billion and by Monday, February 3, 2020, it had dropped to $37.8 billion. It means in less than two weeks in the month of February 2020, the foreign reserves have declined by about $600 million.

The recent decline in the price of crude oil at the international market has not helped Nigeria’s determination to generate more revenue. The commodity has been the main source of foreign earnings for the largest producer of oil in Africa. The country also prides itself as the giant of continent with also the largest economy.
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In the 2020 budget, the federal government fixed oil benchmark at $57 per barrel, with production of crude oil at over 2 million barrel per day.

However, the deadly coronavirus has put a dent to these projections, with the Brent, under which Nigeria’s oil is priced, is selling below $54 per barrel, while the Organisation of the Petroleum Exporting Countries (OPEC) has taken steps to ask its members to further reduce the volume of oil they produce in order to keep prices higher.

It is being speculated that Nigeria may be forced to further cut its present output cap of 1.7 million barrels per day if the proposed 600,000 barrels per day additional ceiling is agreed by members of the cartel.
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At the moment, Russia, one of the key members of the group, is not okay with this decision, leaving the commodity to continue to bleed at the global market.

If prices continue to trade down and the CBN maintains its weekly intervention at the local foreign exchange market, the reserves will continue to dry up and may pull the country into another recession in five years. The apex bank may also be forced to devalue the Naira, which the present government of President Muhammadu Buhari is opposed to.

For now, observers will continue to watch and see the direction things go.

https://businesspost.ng/economy/worry-as-nigerias-external-reserves-head-to-36bn-now-37-4bn/

So long as oil prices stay low, the reserve is going to keep on falling.

Either oil goes above $100 or we keep on talking about that new loan from Christine and company

Dead President


Oil prices will keep declining, the planet's need for oil is decreasing, and in the near future, Oil will sell for as low as $20-$30, what will then be the state of This Nation?

It's time to diversify the Economy, and it's not done by Closing Borders, The people that placed this fulani man at the apex of the helm of affairs of this country are the problem this country have.

And concerning the foreign reserve ish., I don't see a breakthrough unless we exploit other forms of Revenue

Gnaeusmagnus:
So long as oil prices stay low, the reserve is going to keep on falling.

Either oil goes above $100 or we keep on talking about that new loan from Christine and company

Mr Know it All. You will always have excuse for failure.

I went through your posts and below is what I saw. Supporting a governor who paid murderers after killing his people

Bringback9ja:


Mr Know it All. You will always have excuse for failure.

I went through your posts and below is what I saw. Supporting a governor who paid murderers after killing his people

Thanks for the insult, and thanks for misinterpreting my posts.

Do have a good day, and do read about Dutch disease, then we can talk.

Again, Nigeria is not earning enough from oil. Is that not a way of saying that government should stop it's short term thinking about oil? Is it not just my way of saying that government needs to change its economic ways?

Again, good morning

Bringback9ja:


Mr Know it All. You will always have excuse for failure.

I went through your posts and below is what I saw. Supporting a governor who paid murderers after killing his people

Dont mind the evil clown .. always supporting nonsense

GamalNasser:


Dont mind the evil clown .. always supporting nonsense

Thanks for calling me evil.

May God bless you.

Now to explain further, our reliance on oil is why our reserve is dropping. You make the needed infrence....is government needs to change its economic ways, or keep on taking loans.

You people just come and insult people who did not insult you

Government should forget about oil now. Governor should invest in tourism and Agriculture. Stop stealing our future.

Bringback9ja:


Mr Know it All. You will always have excuse for failure.

I went through your posts and below is what I saw. Supporting a governor who paid murderers after killing his people

On my other post.,.if you cared to understand it,you would see that I bash the Kaduna state for not compensating farmers hurt by the Fulani.

Bit you read without understanding, and then called me evil.

Honestly, some of you people, read things better!

johnmartus:
Government should forget about oil now. Governor should invest in tourism and Agriculture. Stop stealing our future.

If they can invest in industrial development, we would no longer need to rely on oil, and we would end up being so prosperous, and jobs would be plentiful.

But this government spends more time on oil, oil, oil. That will finish soon.

Oil is a curse

Gnaeusmagnus:


Thanks for calling me evil.

May God bless you.

Now to explain further, our reliance on oil is why our reserve is dropping. You make the needed infrence....is government needs to change its economic ways, or keep on taking loans.

You people just come and insult people who did not insult you

I wasnt referring to U sir

Gnaeusmagnus:


On my other post.,.if you cared to understand it,you would see that I bash the Kaduna state for not compensating farmers hurt by the Fulani.

Bit you read without understanding, and then called me evil.

Honestly, some of you people, read things better!

Terrorists are meant to be killed. Go and get a life

Your governor will surely compensate those who killed your family.

johnmartus:
Government should forget about oil now. Governor should invest in tourism and Agriculture. Stop stealing our future.

This Sai baba Z just woke up.

Gnaeusmagnus:
So long as oil prices stay low, the reserve is going to keep on falling.

Either oil goes above $100 or we keep on talking about that new loan from Christine and company

Stop shifting goal post like an Anumpama because the same FG said that if we look inwards by eating Nigeria rice abi stones then our Forex will grow since we are using our Forex to buy rice outside.


This suffering will touch all of una

The only thing I picked up here is that Nigeria will plunge into recession again if things continue the way it is.

Are we out of the first one?

Next level

Nigeria needs to earn foreign exchange...

- We manufacture nothing due to corruption
- We sell nothing via tourism due to terrorism
- Agriculture is grounded due to herdsmen..
- A lawmaker bore 27 children and counting..
- Diaspora funding is clamping down due to stringent immigration policies from foreign countries and a bad reputation.

Solution:

Clamp down population spiraling out of control, it automatically..
- makes the available enough while creating employment which in turn reduces terrorism and increases buying power that makes corruption not enviable...

Population control solves it all..

khingTony:
Dead President


Oil prices will keep declining, the planet's need for oil is decreasing, and in the near future, Oil will sell for as low as $20-$30, what will then be the state of This Nation?

It's time to diversify the Economy, and it's not done by Closing Borders, The people that placed this fulani man at the apex of the helm of affairs of this country are the problem this country have.

And concerning the foreign reserve ish., I don't see a breakthrough unless we exploit other forms of Revenue

You are an ignoramus.

Oil prices will keep declining is the only truth you have said. I think it is even more serious than this. Oil prices will crash suddenly in 2023 - 2025 due to electric cars and improvements in.energy use. I hope Trump loses 2020 elections otherwise the crash will.happen sooner caused by a world wide economic depression due to trade wars.

Buhari 's policies are the only hope for keeping the reserves up and the economy strong.

Thank God for border closure, it would have fallen to $25bn now. Nigeria is also plugging food importation hole and will be self sufficient in petrol by 2022.
Infrastructure development will improve internal efficiency and with ports being re opened in Eastern part of Nigeria, a lot of transactions costs will be cut down.

Hmmm

CarlosTheJackal:
Stop shifting goal post like an Anumpama because the same FG said that if we look inwards by eating Nigeria rice abi stones then our Forex will grow since we are using our Forex to buy rice outside.


This suffering will touch all of una

1.You misunderstood my post.

2.If you understood my post, you would eventually see it as a critique of the government...and as reaching the same conclusion somewhat that you reach.

3.Ultimately, Nigeria needs to industrialise. That is the only way we can get rich and prosperous as a nation...and have a good reserve.

4.Sorry you missed my point. You see it as excusing government failure....when it is showing the reason why our economy is in a mess. Our reliance on oil.

Bringback9ja:



Terrorists are meant to be killed. Go and get a life

Your governor will surely compensate those who killed your family.

Good morning and good luck.

You missed my point completely.