External reserves drop by 15.43% to $33.44bn in 4 months

NIGERIA’S external reserves have plunged by 15.43 per cent to $33.44 billion as at Tuesday, April 28, 2020, from $38.60 billion as at December 31, 2019 while external borrowing also climbed.

The declines in reserves has been attributed to Crude oil prices, especially the price of bonny light (Nigeria’s sweet crude) which remained low at $16.51 per barrel.

“Crude oil traders are unwilling to take up Nigerian crude despite the discounts offered,” analysts from Cowry Assets Management Limited revealed.

The country’s foreign reserves have continued its downward trend, dropping by $5.09 billion from $38.53 billion on January 2, 2020 to $33.44 billion as of April 28, 2020, latest statistics from the Central Bank of Nigeria have revealed.

According to the figures, the reserves dropped from $39.8 billion on November 11, 2019 to $39.24 billion on December 13, 2019. This is after the fall by $1.26 billion from $41.76 billion on October 2 to $40.5 billion as of the end of October.

The reserves dropped by $482.18 million from N45.14 bllion as of July 8 to $44.65 billion on August 8, 2019.

During the last Monetary Policy Committee meeting of the banking sector, Godwin Emefiele, the Central Bank governor, said the committee noted the weakened revenue position of the Federal Government, arising from the sharp drop in oil prices.

He reiterated the need for government to urgently reduce reliance on oil revenue by gradually diversifying the economy and improving tax collection.

On the domestic front, he said available data on key macroeconomic variables indicated the likelihood of subdued output growth for the Nigerian economy in 2020.

“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,” he said.

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