Nigeria’s foreign reserves plummets to $376,655.09

Nigeria’s foreign reserves has plummeted from $35.37m, as at May, to $376,655.09 at the end of June.

This is happening amid limited crude exports, biting fuel subsidies, piling debt and a struggling economy.

The balance of the foreign reserve was released by the accountant-general of the federation.

Nigeria, typically Africa’s largest oil exporter, has struggled to benefit from surging crude prices due to pipeline theft and years of underinvestment that have limited oil exports.

Fuel subsidies have also sapped state coffers including the Excess Crude Account (ECA) and in the first four months of this year, Nigeria’s debt servicing costs outpaced public revenue.

Tunde Ajileye, partner at Lagos-based risk advisory firm SBM Intelligence said the numbers were proof that Africa’s largest economy is “hurtling towards a fiscal crisis without the buffer that the ECA provided in 2008 to 2010” after the global recession.

“The Excess Crude Account, which stood at $2.1billion when President Buhari took over in 2015, has dropped to $376k [now],” he said. “This is in spite of oil prices that have been consistently above the oil price benchmark of the federal budget.”

Nigeria’s debt costs are usually below revenue. For decades, the country relied on oil revenue to fund its budget, and is trying to broaden its tax base, but is hindered by an archaic tax collection system.

In recent months, President Muhammadu Buhari has also sought funds to equip the stretched military, which is trying to tame nationwide insecurity, including rebels in the northeast and roving bands of kidnappers in the northwest.