Tuesday, September 9, 2025
23.9 C
Lagos

ALARM! Nigeria is Running Out of Cash

Another day, another oil producer in trouble!

Nigeria is considering asking the World Bank, the African Development Bank and other international organisations for help to plug a hole in this year’s budget created by the collapse in crude oil prices. The government said it is looking to borrow as much as $9 billion to fund its cash-starved economy.

The 75% plunge in crude prices to around $33 per barrel means Nigeria is now losing money on some of the oil it pumps.

Nigeria is the second major oil producing country, after Azerbaijan, to admit it might need emergency financing because of low crude prices.

Nigeria, Africa’s largest economy, is also the continent’s biggest oil producer. The sector accounts for about 35% of GDP, 75% of government revenue and 90% of export earnings.

Its currency is plummeting, with foreign exchange dealers offering much higher rates than the official 199 Naira per dollar. The government has been burning through its foreign currency reserves, which fell to $28 billion at the end of January from $43 billion two years ago.

And its budget deficit is growing fast. The government wants to invest in big infrastructure projects and make the country less dependent on oil.

The deficit is now expected to reach N3 trillion ($15 billion) in 2016, up from a previous estimate of 2.2 trillion.

Nigeria is also suffering from frequent power cuts and fuel shortages because it doesn’t have enough capacity to refine it own crude.

The finance ministry denied reports that it has already asked for emergency cash, but said it is considering a World Bank loan as one way of funding the deficit.

“The truth is that Nigeria… has indicated an intention to borrow N1.8 trillion principally for investment in capital projects to stimulate the economy,” Finance Minister, Kemi Adeosun said in a statement.

Nigeria is exploring the option of borrowing from multilateral organisations such as the World Bank and AFDB, as well as the Export-Import Bank of China, because they offer lower rates of interest than other lenders, she said.

Officials from the African Development Bank visited Nigeria last week.

Nigeria is a member of OPEC, and has been pushing for the Saudi-led oil cartel to cut production to support prices.

OPEC decided in 2014 to wage a price war with low cost producers in the U.S. and elsewhere in a bid to defend market share.

Many OPEC countries are still making money at these prices but others are losing.

Nigeria’s average production costs are estimated at about $31 a barrel.

By: Ivana Kottasova, CNN Money

spot_img
spot_img

Hot this week

Nigeria, Brazil Central Banks Deepen Economic, Financial Co-operation

Nigeria’s Central Bank Governor, Olayemi Cardoso, has held talks...

Ecobank Nigeria to Host Second Edition of Design & Build, Showcasing Premier Innovators in Design, Construction

Ecobank Nigeria, a subsidiary of the leading pan-African banking...

Expert: Fintech, Financial Inclusion Critical for Sustainable Growth of Nigerian Economy

A renowned economist, Dr. Biodun Adedipe, the Chief Consultant/CEO,...

Sterling Bank Marks One Year of Africa’s Groundbreaking Core Banking System

Number one Best Workplace in Banking in Nigeria and...

Topics

Google Slashes Political Lobbying to $3.8m

Google slashed spending on lobbying by 25.5 percent in...

PenCom: Pension Assets Now N18tn as Retirees Reap N3tn Benefits Since 2004

The National Pension Commission (PenCom) says pension assets under...

Africa CEO Forum Launches Online Campaign

The Africa CEO Forum launched a Q&A Campaign#AskDelphine this...

FG Plans N350bn Capital Projects, $1bn Eurobond to Ease Recession

In line with its commitment to stimulate economic growth...

Yeye Adesola Mutiat Odeyeyiwa Strikes 50-Carat Gold

By Goke Ilesanmi The date, June 25 is a symbolically...

NDIC CEO: “Greater Collaboration with Media Critical in Addressing Challenges in Reportage”

Managing Director/Chief Executive, Nigeria Deposit Insurance Corporation (NDIC) Bello...

NITDA, IDC to Examine Developments in WA’s Digital Economy June 22

  The advancement of Nigeria's digital economy has been a...

WAICA Re Wins 2021 NAIPCO Excellence Award

L-R: Conference Chairman, and Chairman/CEO, Prestige Insurance Brokers,...
spot_img

Related Articles

Popular Categories

spot_imgspot_img