Nigeria’s gross external reserves is projected to grow to US$50.0 billion in 2019 and to finance 10 months of imports at the average oil production of 1.80 million per barrel daily.
This projection was the outcome of a sub-Saharan Africa research report by Absa Group limited, one of Africa’s largest diversified financial services group.
The foreign reserves of the Africa’s largest oil producer have declined to US$41.5 billion as of November 23 from its peak of US$48 billion earlier in the year, in spite of higher oil prices and production.
The country along side other Sub-Saharan African countries witnessed a considerable outflow of capital and assets sell off by foreign investors following heightened ethno-religious and political tensions ahead of the 2019 general elections.
Nigerian buffer is estimated to continue to rise to US$52.0 billion and US$54.0 billion in the year 2020 and 2021 respectively.
The report predicts a depreciation in Nigeria’s naira and US dollar exchange rate to N380/$ in 2019 from the current rate of N360 per dollar.
On the fiscal balance, the report says it will remain at -2.0 percent of the Gross Domestic Product (GDP) from 2018 to the year. 2021
Public debt to GDP to reach 23.6 percent in 2019 from 23.1 percent in 2018. Nigeria’s Senate on October 17 this year approved US$2.8 billion Eurobond issuance to finance the 2018 budget and also to fund some infrastructure projects.
“Despite the prevailing global uncertainties and anticipated heightened tensions around the country’s upcoming elections, we expect considerable interest in this issuance as we believe that Nigeria’s credit worthiness has improved markedly since 2017, as the combination of higher oil prices and production has bolstered both external accounts and public finances”, analysts at Absa research said.
The report expect weak consumer demand to continue into 2019 as there is unlikely to be a let up in tight monetary policy conditions in the near term.
With headline inflation slickly above 11 percent year-on-year for some time now, and higher fiscal and election related spending and the impact of flooding on food output expected to continue to exert upward pressure on the inflation outlook.
Nigeria’s headline inflation (year-on-year) decreased to 11.26 per cent in October 2018 from11.28 per cent in September 2018 after two consecutive months of marginal increases, data from National Bureau of Statistics (NBS).
Hope Moses-Ashike in South Africa