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An empty treasury and rapid fall in the economy are signs that Nigeria's economy is facing a double whammy as it gets ready for general elections that are expected to be among the most hotly contested in its history, according to PremiumTimes.
The governor of the Central Bank of Nigeria, Godwin Emefiele, was alerted by an elected official to the fact that Nigeria's external reserves are only $15 billion, far less than the $36 billion balance on the gross external reserves claimed by the bank, which has raised concerns in Abuja and Lagos, according to government officials and business leaders with knowledge of the situation.
Regardless of the desired exchange rate, the nation spent N5.9 trillion on imports in the first quarter of the year, leaving reserves of $15 billion.
Regardless of the chosen exchange rate, the nation spent N5.9 trillion on imports in the first quarter of the year, so $15 billion in reserves would hardly be enough to finance four months of imports.
Financial analysts assert that if not for recent issues in several economic sectors, particularly the export restrictions that prevented the country's petroleum monopoly from increasing reserves in the previous six months, this would not have been a significant issue.
One factor cited for the naira's recent decline in the parallel market is the NNPC's unwillingness to send oil sales receipts to the CBN despite rising crude oil prices.
The reported balance on the gross external reserves has long disguised issues, according to a banker who spoke on the condition that her identity not be used in this report.
Financial analysts assert that if not for recent issues in several economic sectors, particularly the export restrictions that prevented the country's petroleum monopoly from increasing reserves in the previous six months, this would not have been a significant issue.
One factor cited for the naira's recent decline in the parallel market is the NNPC's unwillingness to send oil sales receipts to the CBN despite rising crude oil prices.
The reported balance on the gross external reserves has long disguised issues, according to a banker who spoke on the condition that her identity not be used in this report.
The problem is made worse by the NNPC's conversion to a public limited liability business.
The national bank would have to resort to new sources of foreign cash inflows if export revenues could not be transferred directly into federal coffers.
Most of these sources have however been choked off by the direction and trajectory of the CBN’s monetary policy. All these mean that if the external reserves are depleted within four months at the current rate, the country will no longer be able to pay for imports of food, medicines and materials and spare parts required by industries, an economic crisis similar to what Sri Lanka is experiencing.
While continued export of crude oil by the NNPC may enable the continued import of refined fuel, experts do not expect this to stem the economic collapse caused by the end of the import of consumer and capital goods.
Widespread shortages will become readily evident as shops’ shelves will become empty while the prices of the few items available will keep increasing, putting them out of the reach of most citizens. CBN spokesperson Osita Nwasinobi did not respond to calls and a message seeking comments.
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