Foreign reserves shrink by $5.09bn in 4 months

Nigeria’s foreign reserves shrank by $5.09 billion from $38.53 billion to $33.44 billion in the nearly four-month period between 2nd January and 28th April 2020, the latest figures from the central bank have shown.

The reserves have been on a free fall since the middle of last year, causing it to plunge from $45.14 billion on 8th July to $44.65 billion on 8th August.

It further shed $1.26 billion between 2nd October and 31st October, falling from $41.76 billion to $40.5 billion in between the periods.

According to the figures, the reserves dropped from $39.8 billion on 11th November to $39.24 billion on 13th December 2019.

In recent times, the contraction in the foreign reserves have been compounded by dwindling oil receipts occasioned by the fall in global fuel demand in the aftermath of the coronavirus outbreak

Godswill Emefiele, the apex bank chief, said at the last Monetary Policy Committee meeting that the weakened revenue status of the Nigerian government emerged from the steep slump in oil prices at the global market.

He emphasised the imperative of government reducing its dependence on oil money through the diversification of the economy and improvement of tax collection.

Mr. Emefiele also observed that Nigeria’s domestic macroeconomic variables suggested that the economy might witness subdued growth this year.

“Based on the current downturn in oil prices, staff projections indicate that output in 2020 would be less than earlier envisaged.

“The major downside risks to this outlook, however, include the continued spread of COVID-19; further decline in crude oil prices and the reduction in accretion to external reserves.”