Tuesday, July 8, 2025
23.2 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
spot_img

Hot this week

Tinubu Tax Reforms: Transformative Policy Deployment for Nigerian Economy in a Generation – IMPI

The Independent Media and Policy Initiative (IMPI) has said...

Udeme Ufot to Chair QEDNG Creative Powerhouse Summit

Mighty Media Plus Network Limited, publishers of the online...

NESG-Stanbic IBTC Business Confidence Monitor: Easing Macro-economic Pressures, Favorable Business Climate

The Business Confidence Monitor (BCM) is the flagship survey-based...

Universal Insurance, NHIA, PTAD, Rite Foods Sponsor NAIPE 2025 AGM

The Universal Insurance Plc, National Health Insurance Authority (NHIA),...

MTN, 9mobile Ink National Infrastructure Partnership Deal

L-R: Abolaji Idowu, Chief Financial Officer, 9mobile; Omotola Ojutayo,...

Topics

Stanbic IBTC Named in World’s Top 100 Social Media Savvy Banks

Stanbic IBTC Bank Plc has been named amongst the...

Worldwide Smartphone Sales Grew 3.9% in 1st Qtr 2016

Global sales of smartphones to end users totaled 349...

Towards Curtailing Protein Deficiency in Nigeria 

The challenge of providing good nutrition is global. In...

Emirates Resumes Flights to 29 Cities via Dubai

Following the UAE Federal Government’s announcement to lift restrictions...

Polaris Bank Partners EAS, Funds Training of 1000 Nigerian SMEs on Export to US, Europe

Polaris Bank, in its show of commitment towards empowerment...

Interswitch: Leveraging Novel Solutions Will Drive Growth

As the adoption of digital payment continue to rise...

Mettā Unveils 3rd Fashion Lab Powered by HIVOS East Africa

Mettā Nairobi, in partnership with HIVOS East Africa, is set...

Organic Solutions Trains 4,000 Skin-Care Givers on Formulation, Business Growth

R-L: Mr. Agudiegwu (seated), Chairman and Mrs. Gloria Agudiegwu...
spot_img

Related Articles

Popular Categories

spot_imgspot_img