Recently, oil price surpassed US$70 per barrel due to the heightened threat to energy facilities in the Middle East. As the tension between the United States and Iran increases with the US threatening to attack Iran’s oil installations, there has been a significant rise in oil prices from US$64 to US$72 between December 2019 and January 20203. Given that Nigeria’s oil price benchmark for the 2020 budget is US$57 per barrel, there are likely to be significant gains into the Excess Crude Account in the first quarter. Although the government will benefit from the rise in oil prices in the form of increased oil revenue and foreign exchange reserves, the cost of petrol subsidy will also increase. In order to take advantage of the price increase, the government should ramp up local production and begin the process of fuel subsidy removal.
January 29, 2020
Nigeria Economic Update (Issue 02)
Recently released survey report by the CBN shows an improvement in the availability of secured and unsecured banks credit and loans to households, corporate and small businesses in 2017Q3, and an optimistic outlook in 2017Q4. Among other indices, availability of overall secured and unsecured lending to households improved from -6.2 and -19.2 to -0.9 and -15.0 index points respectively; although still in the negative territory. Index for availability of credit to small businesses improved from -20.1 to -6.7. Lenders and respondents noted that anticipation of a brighter economic outlook, favorable liquidity positions, market share objectives and higher appetite for risk were major factors behind the increase.