The recovery in global crude oil prices (currently at $75.5/b, the highest since Dec-2014) continues to buoy Nigeria’s economic outlook, given the nation’s massive dependence on crude oil export. Yet, the major drivers of the recent price recovery, majorly the US sanctions on Venezuela, the Iranian nuclear deal and the OPEC+1 supply cut, appears unsustainable in the medium to long-term.
In line with this, representatives of the International Monetary Fund (IMF) during its press briefing to unveil the Apr-18 World Economic Outlook, cautioned Nigeria and other oil exporting countries which are yet to utilize the opportunity created by recent uptick in oil prices, to reform their economies, noting that they may not be so lucky if crude prices plunge again. Accordingly, Saudi Arabia, OPEC’s largest producer/exporter recently initiated reforms in the fiscal space by introducing Value Added Taxes (VAT) on goods and services in a bid to ramp-up non-oil revenue via taxes.
Beyond the current improvement in the macroeconomic outlook of the country, we reiterate the need for the relevant authorities to roll out and implement comprehensive long-term reforms premised on accelerating development of the non-oil sector while leveraging on the present “good times” even as the darker clouds loom.