For the first time in eleven months, Nigeria’s foreign reserves after shedding about $11.25bn, rose by $449.5 between 28th of April and 5th of May, the latest figures from the Central Bank of Nigeria (CBN) have shown.
The reserves which had recorded a consistent fall since 11th June, 2019 when it stood at $45.17bn, climbed from $33.44 billion to $33.89 billion in the 7-day period between 28th April and 5th May, the CBN data noted.
Godwin Emefiele, the CBN chief, had stated at the last Monetary Policy Committee meeting of the CBN that the committee observed the weakened revenue position of the Nigerian government, stemming from the steep fall in oil prices.
He emphasised the imperative of government reducing its reliance on oil money by diversifying the economy and boosting tax collection.
Nigeria derives 90% of its foreign exchange earnings from oil and gas while around 65% of government revenues come from the same source.
The International Monetary Fund (IMF) said drop in international oil prices and fallen global fuel demand had jointly weakened Nigeria’s fiscal position and made it vulnerable to external shocks.
According to the IMF, Nigeria’s oil exports are expected to plunge by $26 billion this year while its economy is projected to contract by 3.4%, a 6-percentage point drop relative to pre-COVID-19 estimates.
“With the decline in economic activity, large fiscal and external financing gaps have emerged. Our baseline scenario is uncertain and subject to heightened risks.
“These are mostly linked to a further collapse in oil revenue—due to persistent low oil prices, an inability to sell oil because of depressed global demand, or declining production because of additional OPEC-agreed cuts,” said the IMF.