The COVID-19 pandemic has crippled the global economy, with millions of employers going bankrupt, and millions of employees losing their jobs. It goes without saying that the virus will have more adverse effects on developing countries such as Nigeria.
Nigeria is one of the largest oil producing companies in the world – the 6th in the world. Nigeria has a heavy dependence on oil, contributing to up to 80% of its Federal budget. This year’s budget was made on the premise of an oil price of $57 per barrel and productions of at least two million barrels daily. But COVID-19 has changed all of that.
Today oil prices have tanked below $30 per barrel, and for Nigeria, producing more to compensate for this low prices will only put more downward pressure on prices. What’s more, Nigeria has had to borrow up to a total of $6 billion from the International Monetary Fund (IMF) and the World Bank to finance a part of the budget. With this, unless the debts are cancelled, the naira will further waken and investments will plummet.
What this means is that Nigeria should prepare for long, hard days ahead as oil, which is a major source of revenue for the country, may continue to face low prices for the rest of the year.
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