The Central Bank of Nigeria has predicted a drastic decline in the price of Crude Oil in the next twenty-five years.
This sharp fall will invariably affect Nigeria’s external reserves negatively.
Director, Reserve Management Department of the Central Bank of Nigeria, Lamido Yuguda stated this while delivering a paper on the Impact of External Reserves on Capital flows: The Nigerian Experience, at the twentieth seminar for finance correspondents in Calabar.
The US which used to be the number one buyer of Nigerian crude oil had since ceased to patronize the country. China, the second highest buyer is considering other alternatives.
Mr Lamido however believes that the way out of this is to diversify the sources of the country’s foreign exchange, develop the country’s infrastructure and secure lives and property to create room for Foreign Direct Investment.
The CBN Director noted that sound financial and political environment attracts foreign investments and its attendant benefits.
Nigeria’s fortune in the global oil market had seen a steady decline in past two years leading to a crash in foreign reserve and revenue accruable to state governments. Many state governments have been unable to be up to date in payment of workers’ salaries due to a sharp reduction in allocations from the federal account.