By Dipo Olowookere
The recent decline in the prices of crude oil on the global market is beginning to take its toll on the external reserves of Nigeria. The black gold remains the main source of foreign exchange for the Africa’s largest economy.
In the 2019 national budget signed into law by President Muhammadu Buhari in May this year, the oil benchmark was pegged at $60 per barrel.
However, in the past few days, the price of the commodity, especially the Brent Crude, which Nigeria’s oil is priced, had been sold in below the benchmark, giving some observers something to worry about.
Even as at Tuesday morning, the Brent was traded at $58.66 per barrel, while the Nigeria’s Bonny Light Crude was going for $59.15 per barrel.
A look at the nation’s foreign reserves on the website of the Central Bank of Nigeria (CBN) showed that the amount has dropped below $45 billion.
The reserves went down below $45 billion on Friday, July 26, 2019 and as at the last update on the CBN website, Thursday, August 8, 2019, the amount stood at $44.66 billion.
Business Post observed that last week, the foreign reserves depreciated by 0.25 percent or $11 million to $44.66 billion on Thursday from $44.77 billion on Monday.
Some analysts have warned that if the prices of crude oil continue to fall on the international market, Nigeria may be heading to the second recession under the present administration, which came into power in May 2015.
The country slipped into economic crisis in the second quarter of 2016 as a result of drop in oil prices, but managed to get out after prices and volume of production went up.