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$57 per barrel, there are likely to be significant gains into the Excess Crude Account in the first quarter. Although the government will benefit from the rise in oil prices in the form of increased oil revenue and foreign exchange reserves, the cost of petrol subsidy will also increase. In order to take advantage of the price increase, the government should ramp up local production and begin the process of fuel subsidy removal.
January 29, 2020
Nigeria Economic Update (Issue 02)
Related
Analysis Of Bilateral Trade In UEMOA The Implications Of Trade Effects
The paper examines the
implications of trade effects in bilateral trade drawing evidence from West
African Monetary and Economic Union (UEMOA). It also discusses the importance
of political stability to trade in ECOWAS countries.
Nigeria Economic Update (Issue 25)
Naira appreciated in the week under review. At the parallel market, naira gained 0.54 percent to exchange at N368/$ on June 23, 20175. This is at the backdrop of injections into the forex market by the CBN to the tune of $195 million at the beginning of the review week, to meet various forex demands. This is amid a slight week-on-week increase in the external reserves (by 0.1 percent to $30.23 billion). Despite the recent naira appreciation, the long-term prospects seem bleak given that the ongoing intervention that seeks to stabilize naira by depleting reserves is unsustainable.
Nigeria Economic Update (Issue 6)
Latest figures of FDI flows to Nigeria show
a decline of 27 per cent from $4.7 billion in 2014 to $3.4 billion in 20152,
representing its lowest value since 2005. This decline is largely attributed to
the oil price slump, which has generally increased uncertainty in the economy,
with adverse effects on investors confidence. The fall in FDI flows was
witnessed in most resource based economies in Africa, as FDI flows to the
continent fell by 31 percent in 2015. The forex controls in place in Nigeria
has also exacerbated the uncertainty in economy, and created obstacles for both
domestic and foreign investors. Thus a review of the forex restrictions could
send positive signals to investors.