OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights - Business - Nairaland
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| OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by LRNZH(m): 10:58pm On Feb 26, 2015 |
Since June 2014, global oil prices have dropped by more than 50%. The drop could strongly affect the economic and political stability of these five oil exporting countries. Oil prices make winners and losers. In general, oil importers will gain from low prices, while most oil exporters will suffer. Still, there are differences. While the United States, Norway, and the Gulf States can protect themselves with diversified economies and high hard currency reserves, the oil shock could bring some countries to the verge of economic default and political crisis. 1. Venezuela Venezuela entered the period of low oil prices with an already frail economy ruined by the more than a decade-long socialist regime of Hugo Chavez and his successor Nicolas Maduro. The oil price slump significantly worsened the country’s already failing economy. More than 90 percent of Venezuela’s exports and hard currency reserves depend on oil, and with the price of oil 50 percent down, the country is close to a default. Standard & Poor’s is the last in a line of rating agencies that downgraded Venezuela’s credit rating to junk status and the country’s currency is experiencing a constant devaluation trend. At the same time, inflation is expected to rise to 200 percent this year and the economy to shrink by 7 percent. Consequently, the Maduro government is forced to cut subsidies introduced by the Chavez regime, and to liberalize the economy in accordance with the global realities in the oil markets, which could not only cause strong economic shocks and public outcry, but also trigger a swift regime change. 2. Nigeria Africa’s largest economy is under increased pressure after the sudden drop in oil prices in the last eight months. This is the second blow for one of the continent’s largest oil exporter’s after the shale boom virtually brought to a halt its oil exports to the United States. The country’s budget breakeven price of oil for 2015 is $122, according to Deutsche Bank estimates. Moreover, oil exports constitute more than 70 percent of Nigeria’s budget income and 90 percent of its foreign exchange. As a result, the Nigerian naira has lost a fifth of its value against the US dollar since June 2014. In addition, security instability caused by the Boko Haram campaign in the predominantly Muslim-populated north of the country and the political turmoil ahead of the presidential elections expose bitter divisions along the ethnic and regional lines that could further destabilize the country. 3. Iraq Iraq is particularly affected by the oil price slump, as the country is struggling to bring its oil production to pre-war levels, rebuild the war-torn country and wage a new war against the Islamic State. The country’s finances depend exclusively on oil exports, and oil price volatility strongly affects its economy. At the moment, Iraq is effectively increasing its oil production in order to offset the slump in oil prices. The country’s oil production currently stands at around 4 million barrels per day, and is expected to rise by additional 550,000 barrels. However, despite the recent budget revision tailored to a $56 per barrel price, the fiscal deficit for 2015 is still forecast at $22 billion. Following the improvement in relations between Baghdad and the Kurdish autonomous region, along with the improved situation since the removal of Prime Minister Nouri al-Maliki last August, the political and security situation has made a significant turn for the better in recent months. Nonetheless, the fight against ISIS, which holds great swaths of Northern Iraq, and continuous friction between Iraq’s political factions is draining the country’s finances and threatening its political stability. 4. Russia Russia is a politically stable country and the Putin regime enjoys unprecedented levels of public support. The country’s hard currency reserves are at high levels and the Russian oil industry is more resilient to oil prices volatility compared to its international peers. Thus, Russia will not see major political upheavals in the short term. On the other hand, the oil shock and Western sanctions have hit the Russian economy and its consumers hard. The country’s economy has been under strong pressure since the introduction of sanctions almost a year ago, and the oil price drop only added to the pain, as the Russian 2015-2017 budget draft is based on the $100 per barrel price. Inflation is currently at 17 percent, the ruble slumped by 44 percent in the past 12 months, and the economy is expected to shrink by 3 percent in 2015, according to an IMF forecast. In the long run, with Russia expected to continue to wage war in Ukraine and consequently suffer from an additional set of Western sanctions, along with a prolonged period of low oil prices, both the economic and political situation in the country might deteriorate. 5. Iran Iran has been a major victim of both the ban on oil exports imposed by the international community and falling oil prices. Years of international isolation have taken a toll on Iran’s economy, but the sudden drop in oil prices is threatening to plunge the country into a full-blown recession. This will have a direct impact on the general population, already impoverished by the years of sanctions, as well as on investment into Iran’s tarnished infrastructure. Although it is unlikely that low oil prices will affect the stability of the regime in Tehran, the current situation, in the midst of the nuclear program negotiations, might stir the debate between liberals and conservatives within Iran’s leadership over the future course of the country and its relations with the international community. http://oilprice.com/Energy/Oil-Prices/Oil-Price-Crash-Top-5-At-Risk-Countries.html 4 Likes |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by ozoigbondu: 11:02pm On Feb 26, 2015 |
We will survive never under estimate the die hard spirit of nigerians if we survived Abacha tryannical rule coupled with sanctions imposed on us then we can survive.We also survived the era of scarcity of essential commodity. GEJ has already started diversifying the economy the agricultural and entertaing sector are booming.It is also necessary to cut down on luxurios spending by the government.Money can be saved by cutting down the jumbo pay of the legislators and selling some of the presidential jets.Aides should also be trimmed down The governors should stop depending on federal allocations and oil money and concentarte more on generating their own funds Meanwhile GEJ till 2019 49 Likes 3 Shares |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by Firefire(m): 11:12pm On Feb 26, 2015 |
I pity some states in Nigeria, una never see anything... Aregbesola, I beg pay Osun civil servant. Meanwhile, Dr. Goodluck Jonathan till 2019, Oil price or no oil price. 35 Likes 3 Shares |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by Chukwu94: 11:12pm On Feb 26, 2015 |
THIS IS ONE OF THE REASON WHY WE NEED CHANGE.. SAI GMB/PYO 73 Likes 2 Shares |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by LRNZH(m): 11:16pm On Feb 26, 2015 |
ozoigbondu: [b]Stop cursing us with your GEJ slogan. I don't think you comprehend the reality of this situation. Have you wondered why Angola, Algeria and other Africa oil producers are not on this list? Not even Libya with its war torn issues. On a normal day Nigeria should be like Norway and Gulf states that have managed their earnings well during the high oil price, saved a lot of money and diversified their economy. Because we squandered our earnings and did not invest enough in any meaningful economic diversification, we end up on a list like this. Look at the other countries on this list. Russia is under heavy sanctions and is waging a war in Ukraine. Iran is under heavy sanctions and is propping up the Gov't of Bashar Assad in Syria. Iraq is trying to recover from a major civil war then ISIS broke out and started another round of turmoil. Venezuela is a heavily subsidized state and under western sanctions as well. Nigeria is not under sanctions nor are we running any major socialist or subsidy program. Corruption and ineptitude especially by GEJ's govt got us here. Our national loan burden is about $70Billion today with nothing to show for it.[/b] 166 Likes 8 Shares |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by richol(m): 11:22pm On Feb 26, 2015 |
God help nigeria 1 Like |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by aresa: 11:31pm On Feb 26, 2015 |
when you look at the other countries on that list and their issues which we don't have, you know we are in deep shittttt. 18 Likes |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by benosky(m): 11:32pm On Feb 26, 2015 |
Where is omokri with his useless statistics dat nigeria economy is on d upward trend. Pdp must go. 15 Likes |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by LRNZH(m): 11:33pm On Feb 26, 2015 |
Firefire: Out of the $70Billion National debt, the 36 States and FCT owe about $11Billion of which about $2Billion is for Lagos State. Mind you this is both external and domestic debt. So almost $60Billion (~85%) of this is owed by the FG while Lagos State owes less than 1% (edit: sorry 3%) of the Nigeria's total debt. Remember, Lagos is a very viable state that it can owe up to $5Billion and still be credit worthy. 50 Likes |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by themilanway(m): 11:34pm On Feb 26, 2015 |
Where are those who likes to quote that Nigeria have a better economy than the UAE and UK put together? Where is madam co ordinating moneister? Where are those who like to quote Nigeria as one of the 6th fastest growing economy? You tell person say fire burn Rev Father,him dey ask weda the fire burn him bia bia. We are all in it together,some of una go soon get sense 17 Likes |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by LRNZH(m): 11:40pm On Feb 26, 2015 |
benosky: This govt is built on a foundation of lies and misinformation. Nigeria is doing badly as we speak. How much is Naira exchange rate? Why did Naira not freefall in 2008 when the global economic crash happened like it is doing today? Because OBJ and Soludo had a sound basis on which the economy was run. The lootocracy of GEJ and NOI was exposed immediately the oil price tanked. There was no money to defend the Naira nor any diversification of the economy with all the money borrowed. Don't let Omokri deceive us please. cc: Lalasticlala, Ishilove, Maclatunji, Obinoscopy, OAM4J 49 Likes |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by aresa: 11:48pm On Feb 26, 2015 |
themilanway: Good and vibrant economy is a reflection of strong employment, fair and stable price of food stuff, strong and beneficial currency. We have one of the most horrible employment situation on earth, price of food, goods and services is sky high, currency is @ 220/dollar. The naira is weak and dangerousl devalued. You just have to ignore their ignorant, crooked and deceptive nonsense. This economy can not put butter on bread... 14 Likes 1 Share |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by Firefire(m): 11:54pm On Feb 26, 2015 |
LRNZH: Please recheck your data and confirm the accuracy, it seems I could not see the $60Bn accrued to FG (only) on the DMO database (see attached) or your info is as at when? 6 Likes
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| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by LRNZH(m): 12:01am On Feb 27, 2015 |
Firefire: So DMO puts total National debt at $67Billion as at December 31, 2013. I stated $70Billion if you project to end of February 2015 and add the Naira component you would approximate $70Billion. More importantly, your capture unfortunately does not show breakdown by FG and by States+FCT for total debt (external + domestic). What you should look for is FG debt only (external +domestic). That is where the about $60Billion will show up. edit: you can see that my data is accurate. FireFire, if you really put brain before emotions, you wont be in the GEJite camp. I wish you reason through this and come to an informed decision. The Progressive in you is looking for room to express itself. 48 Likes |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by themilanway(m): 12:05am On Feb 27, 2015 |
aresa: I agree with you.Everything is on a grinding halt. Petty traders are wailing The average business guy is wailing The okada rider and his passengers are wailing The annoying part,90% of people who come here sing madam co ordinating moniestar and her croonies,cant afford a decent 3 square meal 10 Likes |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by Firefire(m): 12:16am On Feb 27, 2015 |
LRNZH: From my data above if the total debt profile of Nigeria (Domestic + External) as at 31st December 2014 is $68.7Bn less $10.9Bn for states, domestic debt remaining $56.8; FG Domestic debt alone is $47Bn leaving us with external debt balance of $9.7B where FG has $6.4. The estimate of FG debts are: Domestic Debts – $47Bn External Debts – $6.4Bn Total Federal Government debt is 53.4Bn and not $60Bn ($6.4Bn no be garri ooo) 5 Likes |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by LRNZH(m): 12:28am On Feb 27, 2015 |
Firefire: How did you work out FG external debt of $6.4Billion? Your chart does not show states' external debts as well so I am wondering how you worked that out....check working again On a side note about the garri comment, between $10 and $20Billion is missing in NNPC (this is the case until the PwC report is made public), and you GEJites don't see anything wrong with it. 29 Likes |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by Firefire(m): 12:32am On Feb 27, 2015 |
LRNZH: You will find attached the external debt data showing what is accrued to the FG: See link for reference: http://www.dmo.gov.ng/oci/subn/docs/Federal%20and%20State%20Governments%20External%20Debt%20Stock%20as%20at%2031st%20December%202014.pdf 1 Like
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| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by Firefire(m): 12:38am On Feb 27, 2015 |
The data below represents some selected states external debt profile with Lagos state having the highest debt among all states of the federation with 18% in relation with that of the FG, while FG has 66% over the entire external debt profile of the country. Why is Lagos State amassing loans considering the Huge IGR, and the allocation from the federation account  Firefire: 4 Likes
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| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by LRNZH(m): 12:52am On Feb 27, 2015 |
Firefire: [b]I see that now. Even going by DMO numbers $54Billion in December or close to $60Billion owed by the FG today is alarming. I don't even want to go into the issue of DMO being involved in some 'doctoring numbers' controversy. Lagos state is taking on projects that are almost at FG scale. Think the Badagry Light Rail, The Lekki Ikoyi Link Bridge, Lastma, Lawma, and the Free Trade Zone. No other state can boast of such project portfolio. Rivers and Kano are other states trying to make much in terms of real projects. I'm not too sure of Akwa Ibom. Even the FG has not taken on similar projects like Lagos. FG accrual from Nigeria's earning is 54%. Why does the FG owe 77% of all national debt? If you notice I'm not worried about external debts because it is a minuscle part of our total debt (from your numbers $9.7Billion out of $54Billion). Do your maths with total debts and see if you will get 18% for Lagos. Focusing only on external debts is deceptive. Again check Lagos state annual accruals versus its debts and you will stop worrying. It is like saying Japan which has a higher debt than Bangladesh should be more worried.[/b] 26 Likes |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by Firefire(m): 1:01am On Feb 27, 2015 |
LRNZH: I am worried for Lagos state, despite the double taxation which results in the huge IGR, near nothing to show for it. Eko School Project is another fraudulent transaction. a lot of Lagos state school is already dilapidated. Lagos Light Rail Project is becoming another bogus project in which the goal post of delivery been shifted severally. Honestly, nothing on ground and around me could compensate nor justify my contribution to the state coffer. Where are all the monies going  2 Likes
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| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by LRNZH(m): 1:05am On Feb 27, 2015 |
Firefire: But you are showing misleading information. Kindly show us Lagos States debt of $2.2Billion as a percentage of national debt (almost $70Billion) and show FG's percentage (between 77% and 85%) as well. Let's approach the matter using the right analysis. The Lagos.light rail and the associated Badagry expressway has made more progress than the much touted FG railways and road network refurbishment. Lest we derail the thread, Nigerias debt profile is huge, especially with nothing to show for it. A large chunk (approx. 80%)of it as I have shown you is from the FG. 19 Likes 1 Share |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by aresa: 1:07am On Feb 27, 2015 |
Firefire: What's the crazy obsession with NL trolls and this abandoned building....? Jobless TanNoids..  13 Likes |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by Firefire(m): 1:09am On Feb 27, 2015 |
LRNZH: Please read my comment again and tell me where to clarify? Firefire: 1 Like |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by Firefire(m): 1:11am On Feb 27, 2015 |
aresa: I always respect you no matter the party you support. Me jobless ? I laugh in Chinese  Btw: That is my alma mater: Zumuratu Islamiya Primary School, Alaba Oro 1 Like |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by LRNZH(m): 1:14am On Feb 27, 2015 |
Firefire: You are focusing on external debts to make Lagos State look bad. I am telling you that external debts alone don't tell the complete story at all. 1. External debts of Nigeria is just ~14% of our national debt. Use Lagos states total debt as a percentage of national debts and you will get ~3% which is nothing compared to your touted 18%. 2. Lagos debt portfolio is more loaded with external than domestic debts because states don't sell bonds, T Bills etc etc. But Lagos debt profile is healthy and work is on ground to justify it. 13 Likes |
| Re: OIL PRICE CRASH: Nigeria In Top 5 At-Risk Countries - Global Risk Insights by dustmalik: 1:14am On Feb 27, 2015 |
benosky:Like Soludo said, our economy is being doctored to look good, when, in fact, it's horrible in reality. 5 Likes |
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