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Foreign Reserves Fall in July, as Sanusi cites Falling Oil Prices As Cause for Concern

By Afolabi Ogunde on August 2, 2012

Depressed crude prices and other macro-economic factors have conspired to reduce the level of foreign reserves from $36.93 billion in June to $36.43 at the tail end of July, according to data from the Central Bank of Nigeria.

The CBN governor, Mallam Lamido Sanusi has said that depressed oil prices should cause concern for Nigeria in the short to medium term.

“The budget is based on assumptions of output of 2.4 million barrels a day, and output has been underperforming. So, $72 may not be an effective benchmark,” Sanusi said.

“Long before you get to $72, you will have major strains on government revenues, so long as output doesn’t improve.”

He said its reasonable to expect a global slowdown as the economies of China, Brazil and India begin to contract.

“In 2007, 2008, 2009, when Europe and America were slowing down, China, India and Brazil were there to take the slack; now there is nobody. We would broadly agree that it’s reasonable to expect a slowdown,” he said.

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