By Alex Chiejina
Nigeria and four other oil-exporting countries such as Angola, Venezula, Azerbaijan, and Russia are now seriously affected by dwindling currency value, a situation that is causing economic uncertainties in the affected countries, the Organisation of Petroleum Exporting Countries (OPEC) has said.
In a paper detailing the impacts of recession on the global oil market, the global body noted that depreciation in the currency value is common in the oil-exporting countries, adding that whether it is the Venezuelan bolívar, or the Russian rouble, low oil prices are wreaking havoc in oil exporting economies and on their national currencies.
”In most cases, the scenario is similar. Over the past decade, oil exporting countries used excessive revenues from oil to expand public services, or simply pursue populist policy in order to buy political stability. Once oil prices started to fall, the budgets did not shrink accordingly, which created a wide gap between the oil revenues and swelling fiscal demands. An unwanted consequence is almost always the rise in inflation and household prices, along with a decline in living standards and stalled economic growth,” OPEC stated.[pro_ad_display_adzone id=”70560″]
It, however, noted that governments were forced to devalue their national currencies in order to stem the rapid outflow of foreign reserves.
Currently, the Nigerian economy is hard hit by the falling oil prices as the national currency, the naira, dropped against the dollar by more than 50 per cent over the past year.
On January 20, the Federal Government requested $3.5 billion loan from the International Monetary Fund (IMF) and the African development Bank to plug its $15billion budget gap.
Observers believe that the country’s oil revenues are expected to fall by 70 per cent in 2016, while the hard currency reserves almost halved from $50 billion to $28 billion and the state’s emergency fund went from $2 billion in 2009 to $2.3 billion currently.
