Since the onset of the recession last year, the Federal Government (FG) has been proclaiming that the way out of the economic crisis remains diversification of the nation’s economy from its over-dependence on the oil and gas sector, which it said was partly responsible for the recession.
Despite all the cries for diversification of the economy, credit ratings agency, Moody’s, has affirmed that oil and gas remains Nigeria’s best hope of lifting its economy from the dredges it currently finds itself. The agency acknowledged the potency of the capital market as a reliable and captive source of liquidity and funding for the government but however, indicated that the oil and gas sector would play a significant role in getting Nigeria out of recession this year.
Giving its reasons for this assertion, it said: “Nigeria’s large hydrocarbons reserves remain a key credit support: it has an estimated 37 billion barrels of oil (about 28% of total African reserves) and nearly 34 billion of oil-equivalent in gas. Oil and gas exports tend to account for over 90 percent of goods exports and a significant share of fiscal revenue (60-70% prior to the current oil shock).
‘‘Our current oil price forecast are $45 per barrel in 2017 and $50 in 2018, compared to prices above $100 on average between 2010 and 2014”.
It stated further that two-thirds of 2017 real growth would come from the oil sector rebound alone, with a strong base effect expected in the second and third quarters.
The rating firm’s Vice President and Lead Analyst for Nigeria, Lucie Villa, went further to project that the Nigerian economy will experience a 2.5 percent growth in 2017 from its 1.5 percent contraction in 2016