Faltering crude oil prices have put the nation’s local currency, the 2018 budget implementation and the fragile economic growth on a crisis path.

Already, the near-convergence of all rates at N360/$, except the official exchange rate of the Central Bank of Nigeria (CBN), has been distorted, with each creating a wide gap, as the parallel market settles for N366/$.

Also, the CBN spot rate lost 0.02 per cent (5 kobo) to close at N306.85/$, while in the investors and exporters FX Window, the naira lost N1.06 to close the week at 365.16/$.

Yesterday, Brent Crude price sustained a renewed volatility at $58.96 per barrel, even as a ready-made market for the product remains uncertain, sending a disturbing signal to the foreign exchange market.

Nigeria’s 2018 budget, at over N9 trillion, benchmarked crude oil price at $51 per barrel. But with reported shut-ins, leaving it at around 1.94 million barrels per day (mbpd) against the projected 2.3 million mbpd and the dwindling prices, projected deficits will widen.
Unfortunately, the ensuing exchange rate differential would reintroduce imported inflation and huge distortion on price stability, worsening the economic growth projection currently at 1.9 per cent, which the budget earlier put at 3.5 per cent.
An analyst, Lukman Otunuga, said Nigeria is again losing immediate gains in the temporary trade truce announced between the two largest economies in the world – United States and China.
“The naira has yet again struggled to benefit from such welcome market conditions with prices hovering around N370 per dollar on the parallel market.
It is becoming clear that the naira’s stability against the dollar was the product of repeated interventions by the Central Bank of Nigeria and with falling oil prices weighing on the naira’s peg against the dollar, complicating the CBN’s effort to defend the naira on the parallel market, further weakness seems to be on the cards.

“The falling oil prices are poised to negatively impact government revenues and the implementation of the 2019 budget. While the short-term outlook for the Nigerian economy might look discouraging, confidence in the nation will most likely receive a boost in the medium to longer term if increased government spending ahead of the elections next year stimulates economic growth.”
Already, Nigeria has again lost about N425 billion in estimated budget shortfalls in the month of October due to lower revenue from both oil and non­oil sources, an affirmation of the oil price volatility and shallow diversification.
Of the shortfall, faltering oil receipts at N422.13 billion in the month of October represented a loss of N218 billion as well as 11.5 per cent below the preceding month’s receipt of N477.06.
The Nigerian Bureau of Statistics (NBS) said this was caused by the drop in the average price of crude oil and declining production arising from the shutdown of some pipelines.
The Head of Research at FSDH Merchant Bank Limited, Ayodele Akinwunmi, said the declining oil price is not good for the economy, especially now that the country is exposed to capital flow reversals.
For him, the budget implementation, increased debt deals, as a result of possible rise in fiscal deficits and the attendant consequences on the general economy, are hugely involved.
“Crude oil is important to the Nigerian economy as the major source of revenue for the government and the largest supplier of foreign exchange to the country. A significant drop in either the price of crude oil or production will directly have a negative impact on the fiscal position of the country.

“It will also cause major macro-economic instability, particularly in the exchange and inflation rates. Despite these fairly positive developments, we are aware that the crude oil market is very volatile. Therefore, it is crucial to learn from the events that happened in 2014 through to 2017, to take proactive measures against an unwarranted economic crisis in Nigeria. Governments at all levels must intensify efforts to implement policies that will grow the non-oil sectors of the economy,” he said.
Another analyst, Egie Akpata, said the renewed uncertainty in oil price would definitely create more work for CBN, especially in stabilising the local currency and maintaining interest rate at this level.
He expressed the optimism that the apex bank is capable of containing the issue, especially as the current leadership has till June to either leave office or continue, despite oil price challenge.
“The only point of expectation of new things, for me, would be if there is change in either government or CBN leadership. Otherwise, as it stands, the focus is on price stability and there are sufficient tools, in my assessment, to achieve it,” he said.
Also, notwithstanding the growth recorded in the nation’s third quarter Gross Domestic Product (GDP) as released by the NBS, stakeholders in the real sector have described the progress as slow, fragile and vulnerable to disruptions in the global oil market.
Though the non-oil sector’s contribution to the GDP in the quarter under review was higher than that of the oil sector (90.62 per cent: 9.38 per cent), some stakeholders worry that dependence on oil revenue might disrupt the system if oil prices drop below $50 per barrel.

Indeed, the nation’s GDP grew by 1.81 per cent (year-on-year) in real terms in the third quarter of 2018.
Compared to the third quarter of 2017, which recorded a growth of 1.17 per cent, there was an increase of 0.64 per cent points.
The second quarter of 2018 had a growth rate of 1.50 per cent, showing a rise of 0.31 per cent. Quarter on quarter, real GDP growth was 9.05 per cent.
In the quarter under review, aggregate GDP stood at N33.36 trillion in nominal terms. This performance is higher when compared to the third quarter of 2017, which recorded a GDP aggregate of N29.37 trillion, thus presenting a positive year-on-year nominal growth rate of 13.58 per cent.
This growth rate is higher, relative to growth recorded in the third quarter of 2017 by 2.88 per cent points and higher than the preceding quarter by 0.01 per cent points with growth rates of 10.70 per cent and 13.57 per cent.
Analysing the data, the Director General of the Lagos Chamber of Commerce and Industry (LCCI) Muda Yusuf said the performance remains sluggish, going by the rate of the expansion, and that the slow growth is a reflection of lingering challenges in the economy.
In terms of sectoral performance, he noted that the agricultural sector is able to record improvements despite the challenges of flooding and insecurity in the sector.
He added that while harvest might have aided growth, there is the need to improve productivity, as the sector is still dominated by smallholder farmers.

https://www.akelicious.net/2018/12/faltering-oil-prices-set-naira-budget.html

Others are looking at other options apart from oil and we are still bent on depending on oil and even spending more billions in looking for more oil

I have nothing to do than to keep crying for this country. For 58 years now(after independence) , we're still talking about petrol while non petrol countries re way much developed than us. Its pathetic

APC go sell this country last last

They should just sell this country and share the money...

Even if na to start life afresh for Togo abi Gabon no wahala...

This country fit shotten person life span walahi

Available

Most Nigerian won't talk about it now but will only shout when recession creeps in, which is becoming obvious

TRUE TALK OH. MAKE THEM SHA GIVE ME MY OWN SHARE

BossTtdiamonds:
APC go sell this country last last

Nigeria!

They said the country no longer depend on oil
that the super dullard has diversified the economy...
Why should a commodity that brings in about 12% of our total revenue disturb us this much?

High or low. Wetin thr average nigerian gain

Crude oil is important to the Nigerian economy as the major source of revenue for the government and the largest supplier of foreign exchange to the country. A significant drop in either the price of crude oil or production will directly have a negative impact on the fiscal position of the country.

Diversification is what we are focusing on at the moment, rightly so.

azraeljaheel:
Available

wetin be this?

According to Osinbajo, Nigeria is working quite well under the leadership of Buhari.

So in short, World Bank, IMF, Global Terrorism Index, WHO, LCCI etc are all lying. People who can't accept their reality can NEVER progress in life.

Continue to depend on Crude oil. Diversify, Nigeria won't even think about it! Haba!!!!

Neimar:


wetin be this?

Zte universal mifi

I thought we're not oil dependent again?

BossTtdiamonds:
APC go sell this country last last

OLX things

Nigeria can never develop if her people only know Hw to do savings or build houses as only form of investment..foreign investment cannot help u...

I thought this useless government had diversified our economy and left Niger delta oil alone.. mumu lying apc government ..

Walehelt:
I thought we're not oil dependent again?

sovyou believed the lying apc government.. I remember how they touted about abandoning the Niger delta oil for other revenue generating sources.. lying demons..

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Nwaforj44:
Faltering crude oil prices have put the nation’s local currency, the 2018 budget implementation and the fragile economic growth on a crisis path.

Already, the near-convergence of all rates at N360/$, except the official exchange rate of the Central Bank of Nigeria (CBN), has been distorted, with each creating a wide gap, as the parallel market settles for N366/$.

Also, the CBN spot rate lost 0.02 per cent (5 kobo) to close at N306.85/$, while in the investors and exporters FX Window, the naira lost N1.06 to close the week at 365.16/$.

Yesterday, Brent Crude price sustained a renewed volatility at $58.96 per barrel, even as a ready-made market for the product remains uncertain, sending a disturbing signal to the foreign exchange market.

Nigeria’s 2018 budget, at over N9 trillion, benchmarked crude oil price at $51 per barrel. But with reported shut-ins, leaving it at around 1.94 million barrels per day (mbpd) against the projected 2.3 million mbpd and the dwindling prices, projected deficits will widen.
Unfortunately, the ensuing exchange rate differential would reintroduce imported inflation and huge distortion on price stability, worsening the economic growth projection currently at 1.9 per cent, which the budget earlier put at 3.5 per cent.
An analyst, Lukman Otunuga, said Nigeria is again losing immediate gains in the temporary trade truce announced between the two largest economies in the world – United States and China.
“The naira has yet again struggled to benefit from such welcome market conditions with prices hovering around N370 per dollar on the parallel market.
It is becoming clear that the naira’s stability against the dollar was the product of repeated interventions by the Central Bank of Nigeria and with falling oil prices weighing on the naira’s peg against the dollar, complicating the CBN’s effort to defend the naira on the parallel market, further weakness seems to be on the cards.

“The falling oil prices are poised to negatively impact government revenues and the implementation of the 2019 budget. While the short-term outlook for the Nigerian economy might look discouraging, confidence in the nation will most likely receive a boost in the medium to longer term if increased government spending ahead of the elections next year stimulates economic growth.”
Already, Nigeria has again lost about N425 billion in estimated budget shortfalls in the month of October due to lower revenue from both oil and non­oil sources, an affirmation of the oil price volatility and shallow diversification.
Of the shortfall, faltering oil receipts at N422.13 billion in the month of October represented a loss of N218 billion as well as 11.5 per cent below the preceding month’s receipt of N477.06.
The Nigerian Bureau of Statistics (NBS) said this was caused by the drop in the average price of crude oil and declining production arising from the shutdown of some pipelines.
The Head of Research at FSDH Merchant Bank Limited, Ayodele Akinwunmi, said the declining oil price is not good for the economy, especially now that the country is exposed to capital flow reversals.
For him, the budget implementation, increased debt deals, as a result of possible rise in fiscal deficits and the attendant consequences on the general economy, are hugely involved.
“Crude oil is important to the Nigerian economy as the major source of revenue for the government and the largest supplier of foreign exchange to the country. A significant drop in either the price of crude oil or production will directly have a negative impact on the fiscal position of the country.

“It will also cause major macro-economic instability, particularly in the exchange and inflation rates. Despite these fairly positive developments, we are aware that the crude oil market is very volatile. Therefore, it is crucial to learn from the events that happened in 2014 through to 2017, to take proactive measures against an unwarranted economic crisis in Nigeria. Governments at all levels must intensify efforts to implement policies that will grow the non-oil sectors of the economy,” he said.
Another analyst, Egie Akpata, said the renewed uncertainty in oil price would definitely create more work for CBN, especially in stabilising the local currency and maintaining interest rate at this level.
He expressed the optimism that the apex bank is capable of containing the issue, especially as the current leadership has till June to either leave office or continue, despite oil price challenge.
“The only point of expectation of new things, for me, would be if there is change in either government or CBN leadership. Otherwise, as it stands, the focus is on price stability and there are sufficient tools, in my assessment, to achieve it,” he said.
Also, notwithstanding the growth recorded in the nation’s third quarter Gross Domestic Product (GDP) as released by the NBS, stakeholders in the real sector have described the progress as slow, fragile and vulnerable to disruptions in the global oil market.
Though the non-oil sector’s contribution to the GDP in the quarter under review was higher than that of the oil sector (90.62 per cent: 9.38 per cent), some stakeholders worry that dependence on oil revenue might disrupt the system if oil prices drop below $50 per barrel.

Indeed, the nation’s GDP grew by 1.81 per cent (year-on-year) in real terms in the third quarter of 2018.
Compared to the third quarter of 2017, which recorded a growth of 1.17 per cent, there was an increase of 0.64 per cent points.
The second quarter of 2018 had a growth rate of 1.50 per cent, showing a rise of 0.31 per cent. Quarter on quarter, real GDP growth was 9.05 per cent.
In the quarter under review, aggregate GDP stood at N33.36 trillion in nominal terms. This performance is higher when compared to the third quarter of 2017, which recorded a GDP aggregate of N29.37 trillion, thus presenting a positive year-on-year nominal growth rate of 13.58 per cent.
This growth rate is higher, relative to growth recorded in the third quarter of 2017 by 2.88 per cent points and higher than the preceding quarter by 0.01 per cent points with growth rates of 10.70 per cent and 13.57 per cent.
Analysing the data, the Director General of the Lagos Chamber of Commerce and Industry (LCCI) Muda Yusuf said the performance remains sluggish, going by the rate of the expansion, and that the slow growth is a reflection of lingering challenges in the economy.
In terms of sectoral performance, he noted that the agricultural sector is able to record improvements despite the challenges of flooding and insecurity in the sector.
He added that while harvest might have aided growth, there is the need to improve productivity, as the sector is still dominated by smallholder farmers.

https://www.akelicious.net/2018/12/faltering-oil-prices-set-naira-budget.html

NORTHERN NIGERIA STOP FIGHTING OVER THE CRUDE OIL OF THE NIGER DELTA REGION.

ACCEPT RESTRUCTURING OF THE NIGERIA FEDERALISM WHERE ALL REGION MUST CONTRIBUTE TO THE CENTRE TO SUSTAIN IT AND ALSO CONTROL THEIR GOD GIVEN RESOURCES

FACE AGRICULTURE AND DEVELOP IT TO INTERNATIONAL LEVEL AND THE MONEY WILL FLOW

Quite unfortunately many northerners who have enjoyed the wealth of Nigeria do not even know how crude oil look like or know the community that is producing this crude oil in Nigeria.


STOP THIS "MONKEY DEY WORK" "BABOON DEY CHOP" FEDERALISM.

The earlier the country economy is diversified to generate more money for each region of Nigeria the better.

IT IS A SHAME THAT WITH OIL AND GAS WHICH ARE THE BI-PRODUCT OF ELECTRICITY, NIGERIA IS STILL HAVING EPILEPTIC POWER SUPPLY THROUGHOUT THE FEDERATION.

Nigeria power sector need to be developed for electricity to be generated both for domestic use and industrial use including small scale business who rely on electricity to operate.

azraeljaheel:
Available

You keep posting this pic yet you have not told us what it is nor what it's used for

Realdeals:
Most Nigerian won't talk about it now but will only shout when recession creeps in, which is becoming obvious

The only issue that Nigerians love to talk about is religious issues

MarianaTrench:


You keep posting this pic yet you have not told ups what it is not what it's used for

A mifi

Nigeria would be great again. I was going to type something negative but I realized it won't change anything.

Let's keep hoping and contributing our own part by keeping to rules, voting during the elections. Let's contribute to Nigeria being great again.

bigpicture001:
Nigeria can never develop if her people only know Hw to do savings or build houses as only form of investment..foreign investment cannot help u...

foreign investment is needed


it will surprise you to know that the US, Britain and China are the biggest recipients of FDI and FPI

but the locals need to complement as well

wink2015:


NORTHERN NIGERIA STOP FIGHTING OVER THE CRUDE OIL OF THE NIGER DELTA REGION.

ACCEPT RESTRUCTURING OF THE NIGERIA FEDERALISM WHERE ALL REGION MUST CONTRIBUTE TO THE CENTRE TO SUSTAIN IT AND ALSO CONTROL THEIR GOD GIVEN RESOURCES

FACE AGRICULTURE AND DEVELOP IT TO INTERNATIONAL LEVEL AND THE MONEY WILL FLOW

Quite unfortunately many northerners who have enjoyed the wealth of Nigeria do not even know how crude oil look like or know the community that is producing this crude oil in Nigeria.


STOP THIS "MONKEY DEY WORK" "BABOON DEY CHOP" FEDERALISM.

The earlier the country economy is diversified to generate more money for each region of Nigeria the better.

IT IS A SHAME THAT WITH OIL AND GAS WHICH ARE THE BI-PRODUCT OF ELECTRICITY, NIGERIA IS STILL HAVING EPILEPTIC POWER SUPPLY THROUGHOUT THE FEDERATION.

Nigeria power sector need to be developed for electricity to be generated both for domestic use and industrial use including small scale business who rely on electricity to operate.

the south (especially those fools in the Niger Delta) love it that way.

Allowing the north $hit on their heads and reap much more than they deserve who is pointing to the Igbo man as the source of his problems

I don't pity them anymore......

As long as they remain foolish, let them reap the results of foolishness

Ugosample:


foreign investment is needed


it will surprise you to know that the US, Britain and China are the biggest recipients of FDI and FPI

but the locals need to complement as well

...they get dt much. FRI Nd FPI cause of their very attractive returns on investment in their economies nd they hv. good financial system to monitor capital flight.

As for nigeria. The CPI is very low and the stupulated capital flight rate us very high couple with weak financial system that MTN usually explore..

I tell u. I don't buy from Shoprite cuz of this nd nigerians will b worse off with foreign investment

Ezechinwa:


The only issue that Nigerians love to talk about is religious issues

That has continued to put them under perpetual mental slavery

I just wish that the oil will dry up so that we start being serious about getting things done properly