Five oil exporting countries, including Nigeria, Angola, Venezula, Azerbaijan, and Russia are mostly affected by falling currency value, Organisation of Petroleum Exporting Countries (OPEC) has said.
OPEC, in a paper detailing the impacts of recession on the global oil market, said the countries were picked among several others as having showing serious effects of fall in currency value.
The body said depreciation in the currency value is common in the in oil exporting countries, adding that whether it is the Venezuelan bolívar, or the Russian rouble, low oil prices are wreaking havoc in oil exporting economies and on their national currencies.
OPEC said: ” In most cases, the scenario is similar: over the past decade, oil exporting countries used excessive revenues from oil to expand public services, or simply pursue populist policy in order to buy political stability. Once oil prices started to fall, the budgets did not shrink accordingly, which created a wide gap between the oil revenues and swelling fiscal demands.”
According to OPEC, governments were forced to devalue their national currencies in order to stem the rapid outflow of foreign reserves.
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“An unwanted consequence is almost always the rise in inflation and household prices, along with a decline in living standards and stalled economic growth,” it added.
It said Nigeria’s economy was hard hit by the falling oil prices as the national currency, the naira, dropped against the dollar by more than 50 per cent over the past year.
On January 20, the Federal Government requested $3.5 billion loan from the International Monetary Fund (IMF) and the African development Bank to plug its $15billion budget gap. The country’s oil revenues are expected to fall by 70 per cent in 2016, while the hard currency reserves almost halved from $50billion to $28billion and the state’s emergency fund went from $2 billion in 2009 to $2.3billion currently.
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