Nigeria’s foreign reserves plunge as oil revenue drops

June 17, 2020
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Nigeria’s foreign reserves which had maintained a continuous increase fell by $115.26 million in the one week period between 4th and 11th June 2020, data obtained from the Central Bank of Nigeria (CBN) on Wednesday have shown.

The reserves, which had a balance of $36.56 billion as of 4th June, dropped to $36.45 billion on 11th June, translating to a decline of 0.32%.

The CBN data revealed that the reserves had maintained a continuous increase from a balance of $33.52 billion on 30th April until it started diminishing in early June.

Between 11th June 2019 and 28th April this year, the reserves had been on a free fall, plunging from $45.17 billion to $33.89 billion, representing a loss of $11 billion.

Revenue from oil, which accounts for about 90 per cent of Nigeria’s foreign exchange earnings, is projected by the International Monetary Fund to fall by over $26 billion this year.

Godwin Emefiele, the CBN Governor, at the last Monetary Policy Committee meeting, stressed the significance of reducing dependence on oil revenue by gradually diversifying the economy and improving tax collection.

“Central to the committee’s considerations were the impact of the COVID-19 pandemic, the oil price shock and the likely short to medium-term consequences on the Nigerian economy.

“In particular, the committee acknowledged the gradual improvement in macroeconomic variables, particularly the improvement in the equities market, the containment measures of the COVID-19 induced health crisis as well as the impact of the increase in crude oil price on the external reserves,” he said.

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