Nigeria has recorded a current account Balance of Payment deficit continuously for 9 consecutive quarters, since the first quarter of 2019, summing up to a deficit of $33.35 billion in a little over two years, according to data sourced from official quarters.
Balance of Payment (BOP) is a statement that records all the monetary transactions made between residents of a country and the rest of the world during any given period. It is ideal in measuring whether a country has a surplus or deficit of funds.
According to statistics, Nigeria’s current account continued in its negative trajectory in the first quarter of the year to stand at a deficit of $1.75 billion, characterized by a huge trade deficit, a decline in foreign direct investments as well as in remittances.
This represents the lowest deficit recorded since the first of 2019, which signifies that Nigeria’s net current account could enter into positive territories soon. Net current account declined from a deficit of $5.26 billion recorded in the fourth quarter of 2020 to a deficit of $1.75 billion in the first of 2021.
Nigeria’s current account deficit is largely fueled by a huge dependence on the importation of foreign items, while Nigeria’s major source of export earnings is crude oil, which is highly volatile and currently affected by the cut in OPEC production quota.
The International Monetary Fund (IMF) mission to Nigeria advised in 2020 that the country needs to embrace the broad market and exchange rate reforms to address recurrent Balance of Payment (BOP) pressures and raise the medium-term growth path.
In a statement by the Mission Chief for Nigeria at the International Monetary Fund (IMF), Ms Jesmin Rahman, she noted that the low crude oil prices in 2020 had negatively affected Nigeria’s Balance of Payments pressures, also citing the lockdown measures which stalled economic activities in the country.
