Lamido Sanusi, the Central bank of
Nigeria (CBN) governor, has once again reiterated the need for
structural reforms to be put in place in the country.
Speaking to newsmen at the end of the
just concluded Spring meeting in Washington D.C, United States, Sanusi
said Nigeria will be exposing itself to major
challenges if it fails to save now that oil prices are high.
“We need to protect ourselves and hedge
because of the vulnerability of our economy because of oil price,” he
said. “This reinforces the need to save at the time when oil prices are
high because if these dark clouds translate to fall in oil prices
Nigeria is going to have major problems.
“The whole idea of saying let us look at
the excess crude account, let us save now when prices are over $100, is
basically not because we have a problem now. But if something happens
and something may happened based on what we beginning to see, we are
going to have problems in both the fiscal and the exchange rate sides.
The CBN governor said the country’s experiences when global prices of oil fell to $37 dollars should serve as a lesson for all.
“We have seen oil fall to $37 per barrel
and we all know what the country went through,” he said. “We will
continue engaging until all the tiers of government agree that we have
to safe.
"There will be a very bad day and a lot of gnashing of
teeth if the oil price crashes and we haven't saved a thing. Our major
concern is a major decline in the price of oil or (domestic) output
would lead to a massive depreciation of the currency, a collapse in
reserves and a huge growth in deficits and some of the states outside of
the oil-producing region might find actually themselves in a situation
where are not able to pay salaries," he said.
"I am trained to think in terms of 'what if' and that's
the mindset I bring to my job. What happens if oil prices go to $50 a
barrel? It's happened before."
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