Nigeria’s oil and gas exports are envisaged to plunge by a minimum of $26.5 billion as oil prices take a bashing from the coronavirus pandemic, the International Monetary Fund (IMF) said late Wednesday.
Nigeria told the IMF in its application for an emergency financial assistance that crash in the prices of oil, which generates 65% of government’s revenue, and the sweeping reverberations of the coronavirus pandemic on the economy, created an external financing gap of $14 billion.
In a comprehensive statement related to the IMF’s approval of $3.4 billion credit for Nigeria, the Fund said the country remained vulnerable to emerging risks especially in oil markets.
“Rising unsold cargoes could also impact oil production, which could decline further through OPEC agreed cuts or if prices persist below production costs.”
Global oil prices have fallen steeply as lockdowns intended by governments to curb the spread of the new virus have triggered approximately 30% fall in fuel demand across the world.
Nigeria also faces cut in crude oil output in conformity with the deal struck by OPEC and its allies earlier this month to reduce global production by as much as 9.7 million barrels per day or 23% each in May and June.
The Nigerian government, in its letter to the IMF, detailed plans to allow a “more unified and flexible exchange rate regime,” in a bid to ramp up its revenue to 15% of its Gross Domestic Product and to adopt cost-reflective electricity tariffs by 2021.
It noted that the new fuel price regime would permanently remove expensive fuel subsidies.
Between 2006 and 2018, Nigeria spent an estimated N10 trillion ($27.78 billion) on subsidies