The servicing of debts by Nigeria may limit the Federal Government’s ability to increase economic productivity, the Organisation of Petroleum Exporting Countries said on Tuesday, 14th of July 2020. OPEC, also disclosed that based on direct communication with Nigeria, the country’s crude oil production dropped from the 1.76 million barrels per day in the first quarter of this year to 1.4 million barrels per day in June.
Nigeria is a member of OPEC and the cartel recently agreed to cut oil production in order to salvage global crude oil prices from total collapse. In its monthly Oil Market Report released on Tuesday and obtained by our correspondent in Abuja, the oil cartel observed that Nigeria’s public debt increased by around 15 per cent year-on-year by the end of March 2020 to $79.3bn.
This, it said, was driven by growth in both domestic and foreign borrowing due to a shortage caused by a decline in internal revenues and lower global crude oil prices. OPEC noted that despite Nigeria’s debt-to-Gross Domestic Product ratio, which was moderate by international standards at about 20 per cent, the Federal Government’s debt service-to-revenue ratio was already high due to low tax revenue.
“As a result, debt servicing might limit the government’s ability to increase economic productivity, and the fiscal account may remain in deficit throughout the medium term,” the cartel stated. On the reduction in crude oil production, OPEC said Nigeria’s outputs based on direct communication with the country were 1.76 million per day and 1.52 million barrels per day in the first and second quarters of this year respectively.
It stated that in May and June 2020, the country’s crude oil productions were 1.44 million bpd and 1.41million bpd per day respectively. It also noted that according to secondary sources, total OPEC-13 crude oil production averaged 22.27 million barrels per day in June 2020, lower by 1.89mb/d month-on-month. It stated that crude oil output decreased mainly in Saudi Arabia, Iraq, Venezuela, UAE, and Kuwait, while production increased primarily in Equatorial Guinea and Libya.
“In June, additional voluntary production adjustments by Saudi Arabia, the UAE and Kuwait were noted,” OPEC stated. It further stated that compensatory production adjustments for the countries not able to meet their production levels in May were announced following the 19th Joint Ministerial Monitoring Committee on June 18, 2020. It noted that the compensatory production adjustments were scheduled to take effect in the third quarter of this year.