Data compiled from the Central Bank of Nigeria (CBN) showed that the last time the forex reserves, which are derived mainly from the proceeds of crude oil earnings, was around its current value was on January 17 this year, when it stood at $44.931 billion.
According to financial market analysts, the dwindling performance of the external reserves could be attributed to the increased usage of the reserves to support the naira.
The CBN offered $300 million at the Retail Dutch Auction System (RDAS) yesterday, whereas the total amount sold was $299 million.
In addition, the federal government revenues have continued to face significant pressure due to the decline in oil production as a result of the combined effects of oil theft and pipeline shutdown due to the burgeoning illegal trade.
The CBN Governor, Mallam Sanusi Lamido Sanusi, stated recently that a significant per cent of the country’s revenue was being lost, “either the pipelines are being vandalised or oil leakages and the revenues are affected.”
Sanusi added: “We are a country that spends foreign exchange on things we should not spend foreign exchange on. We are one of the world’s largest producers of crude oil, but we are one of the biggest importers of petroleum products. We have a population of 170 million people, we have all the resources, and yet we import rice from Asia. We import tomato paste from China. We spend our foreign exchange to import what we produce,” he added.
The BGL Securities in a recent report had also identified oil theft, pipeline vandalism and technical hitches as the albatross to Nigeria’s foreign reserve build up as well as the Excess Crude Account (ECA)/Sovereign Wealth Funds (SWF) savings. This it pointed out may affect fiscal sustainability.
The report stated: “The country is currently experiencing the worst oil production disruptions in four years with output falling to pre-amnesty programme levels.
“The disruption in oil production explains the reason why the increasing global crude oil price to five-month high of $111 per barrel has not had the expected impact on government revenue, its savings and accretion to the foreign reserves.”