According to the economic report released by the Central Bank of Nigeria (CBN) yesterday, for the fourth quarter of 2018, total oil revenue rose by 129 percent to N9.4 trillion in 2018 from N4.1 trillion in 2017.
The report stated that at N2,412.21 billion, federally-collected revenue in the fourth quarter of 2018 was lower than the proportionate quarterly budget estimate of N3,321.36 billion by 27.4 per cent. It also fell below the receipts in the preceding quarter by 4.8 per cent.
An analysis also uncovered that the moderate price of Nigeria’s crude oil, Bonny Light rose by 26 per cent to $70.66 per barrel in 2018 from $52.51 per barrel in 2017.
Implications of fluctuating oil revenues in Nigeria
Oil revenue has been and still is the mainstay of the national economy and is likely to remain so for a long time to come, as it currently provides the bulk of government revenue and most of the foreign exchange earnings.
Nigeria relies heavily on crude oil revenue to fund government spending. Oil accounts for about 15% of Nigeria’s GDP but it makes up about 80% of government revenue. Thus, a decline in oil price has an adverse impact on government revenue, thereby increasing the requirement for borrowing and debt servicing and attendant impact on the funds available for capital expenditure.
With recent higher crude oil prices, external reserves have bounced back and were at about $46 billion in August 2018. This fluctuating trend in external reserves reflects the current concern of the CBN to continuously defend the Naira in the face of flux in foreign reserves.
A consequence of this fluctuation is the unsustainability of some of the CBN measures. Some of these measures (for example, tightening fiscal and monetary policies) have adverse consequences for other sectors of the economy.