Central Bank of Nigeria (CBN) has said that despite the rising global oil price in the international market, Nigeria is not benefiting from the oil price increase.
Deputy governor of the apex bank, Edward Lametek Adamu, made this known at the recent Monetary Policy Council (MPC) meeting held by the bank.
Adamu said that although the oil price increase is considered to be beneficial to major oil exporters like Nigeria, it does not equate to higher revenue nor improve the external reserves of the country’s economy.
He stated that inflation remains a major concern for global policymakers and that the war’s adverse consequences are already being felt in Nigeria.
According to Adamu, commodity prices are rising fast as investors embrace gold, and global demand for crude oil appears to outstrip supply, owing to the sanctions on Russia.
“Crude oil prices are high and could remain so for some time. Unfortunately, this is neither translating to more revenues for the government nor increased accretion to the country’s external reserves,” he said.
Adamu said that oil earnings would only be offset by fuel subsidies and increased production costs.
“Under this condition, the cost of subsidy on PMS will increase, further limiting the fiscal space for supporting growth. Other downside risks to growth emanating from the war in Ukraine include rising gas prices as well as the cost of some intermediate goods. Manufacturing and agriculture could take a hit from this development.”
“It appears to me that domestic output recovery is severely threatened. In effect, the CBN cannot at this time relent in supporting growth using monetary policy and development finance interventions which have so far proved to be among the economy’s critical safety nets,” he added.
Reports showed that Nigeria’s external reserve fell by 0.36% on Monday 9th May, to $39.17 billion, down from $39.31 billion it recorded on May 8. The fall in external reserves has been attributed to the CBN’s ongoing intervention in the foreign exchange market intended to maintain the local currency’s stability in the official investors and exporters (I&E) window.
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