According
to the CBN, crude oil price has risen to $42.94per barrel, a 33 percent
rise compared to $32.25 per barrel in the previous month.[i]
The rise comes just as many economies are reopening, recording a marginal
increase in demand. However, world oil demand is still expected to drop by 9.1
million barrels per dollar.[ii] OPEC and its member countries have agreed to
drop oil production in order to control market supply and consequently price.
With this agreement, the revenue gains from increasing oil price for Nigeria
could be marginal as the country is expected to cut production by about 22
percent to 1.4 million barrels per day which may also hinder the realization of
the revised 2020 budget considering that the crude oil production estimate is
1.7 million barrels per day. To ensure performance of the 2020 budget,
concerted efforts must be in place to ensure optimum collection of non-oil
revenues by blocking leakages and non-remittances through improved administrative
and monitoring mechanisms.
July 14, 2020
Nigeria Economic Update (Issue 25)
Related
Nigeria Economic Update (Issue 8)
Recent
data from the National Bureau of Statistics (NBS) show that total capital
importation in 2015 fell steeply by 53.5 per cent from $20,750.76 million in
2014 to $9,643.01 million in 20152. This decline was largely driven
by a substantial drop in portfolio investment (the largest component of Capital
Inflows), which fell by 59.74 percent. The exclusion of Nigeria from the JP Morgan
EM Bond index, the slump in crude oil prices, the decision of the US Federal
Reserve to raise interest rates and the capital control measures imposed by the
Central Bank of Nigeria (CBN) are the notable drivers of the reduced inflow of
capital. Going forward, improving the business environment, especially easing
foreign exchange controls, would determine the extent to which the economy can
attract increased capital inflows.