As Nigeria’s economy continues to be hampered by the COVID-19 impact with the #EndSars protests worsening its productivity prospects in recent weeks, analysts at the Centre for the Study of The Economies of Africa (CSEA) have advised the fiscal authorities to build fiscal buffers to reverse the nation’s worrisome current account balance and stall further depletion of the foreign reserves.
The analysts, in the Centre’s latest Nigeria Economic Update Issue 40 sourced by BRTNews.ng today, noted that based on recent reports by the Central Bank of Nigeria (CBN) on the foreign reserves, there was a growing need by the fiscal authorities to adopt proactive fiscal measures to tackle the current irregularities foreign exchange (forex) inflow and outflow in the economy and by so doing, keep the foreign reserves balance growing.
The economics researchers, who listed some of the irregularities in the economic space as the inclement economic climate, forex outflows outweighing inflows and worsening current account balance, predicted that if the ugly trend was not reversed, the nation’s foreign reserves will decelerate significantly by the end of the financial year.
The CSEA Economic Update report stated: “In the one-month period between August 29th and September 29th, Nigeria’s foreign reserves grew at the marginal rate of 0.16 percent ($58.464 million) as reported by the Central Bank of Nigeria (CBN). Irregularity was observed as the foreign reserves balance rose and fell over the reported period. By September 29th, the balance had risen from $35.665 billion to $35.724 billion.
“Due to the current economic climate, outflows outweighing inflows, and the worsening current account balance, external reserves are expected to decelerate. Nevertheless, if these irregularities are not checked, the reserves will decrease drastically. Supporting this claim, the CBN has estimated that the nation’s international reserves will be between $29.9 billion and $34.4 billion by the end of December.
“Therefore, to tackle the irregularities, the government should regulate the economic situation by building its fiscal buffers that can absorb unprecedented economic shocks”, the experts advocated.