WHEN the price of oil tumbles, you should worry about a country that relies on the stuff for 75% of government revenue and 95% of exports. That country is Nigeria, Africa’s biggest economy. Earlier this year oil was selling at well over $100 a barrel. It is below $80 now. Nigeria’s currency, the naira, is diving; the central bank is shedding foreign-exchange reserves in its defence. On November 25th it hiked interest rates by a percentage point to 13% (the first increase in three years) and said it had reduced its target rate for the naira (against the dollar) by a further 8%. That will not be the end of the story.Since 2004 the Nigerian economy has expanded at an average rate of 7% a year—faster than the west African average. High oil prices spurred the boom: Nigeria exports 2m barrels a day, much of it especially prized by refiners for its low sulphur, which makes it easier to meet environmental rules. Unfortunately, most of the extra 3m barrels of daily production America has added since 2011 have been low in sulphur too. As a result, low-sulphur oil has fallen even more dramatically in price than other sorts. The Economist Intelligence Unit, a sister company of The Economist, reckons that in 2015 Nigeria’s oil exports will bring in $67 billion, an 18% drop from last year, even though its output is rising.As oil revenue has dropped, the naira has...
from The Economist: Finance and economics http://ift.tt/1yfCEa6
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