CBN Raises Alarm Over $62B Oil Revenue Crash, Threatens 2025 Budget

CBN Raises Alarm Over $62B Oil Revenue Crash, Threatens 2025 Budget

CBN has raised an alarm over a shocking $62 billion crash in Nigeria’s oil revenue, a fall that now threatens the 2025 national budget and could plunge the country into deeper financial trouble.

The Central Bank of Nigeria Governor, Yemi Cardoso, revealed this alarming drop at the latest Monetary Policy Committee (MPC) meeting. According to him, Nigeria’s oil earnings in foreign exchange plummeted from $93.89 billion in 2011 to just $31.4 billion by 2020. That’s a staggering 66% decline over nine years.

“This signals a serious risk to our financial stability,” Mr Cardoso said, warning that this slump in oil income could choke the government’s spending power in the coming months.

The CBN pointed to increasing oil production in non-OPEC countries and global economic uncertainties—especially rising geopolitical tensions and unpredictable U.S. trade policies—as key reasons behind the steady fall in crude oil prices and Nigeria’s foreign exchange (FX) revenues.

Despite the grim outlook, the MPC chose to keep the Monetary Policy Rate (MPR) unchanged at 27.5%, a decision aimed at consolidating recent gains in the economy.

Mr Cardoso stated that the naira is beginning to show signs of recovery, the foreign exchange market is becoming more stable, and the difference between official and parallel market rates has narrowed. The external reserves also rose to $38.90 billion by May 16, 2025, which provides enough cover for 7.6 months of imports.

Still, the CBN isn’t taking any chances. It has warned that Nigeria’s 2025 budget is at serious risk if oil prices continue their downward trend. Cardoso called on the fiscal authorities to act fast—urging them to increase FX earnings from gas and non-oil exports, and to ensure that public spending becomes more efficient.

“The collapse in oil revenue puts enormous pressure on our budget plans. We must diversify and tighten our financial discipline,” he said.

During the committee meeting, the MPC expressed concern that oil prices, if they remain low, could derail the federal government’s 2025 budget.

The CBN also responded to international economic shocks, such as former U.S. President Donald Trump’s trade tariffs, by intervening in the market with a nearly $200 million sale to defend the naira.

Cardoso acknowledged that inflation remains a problem, driven by high electricity costs, FX pressures, and structural issues in the economy. But he assured that the bank is monitoring the situation closely and taking calculated steps to stabilize prices.

Aside from holding the MPR steady, the MPC also retained the asymmetric corridor around the MPR at +100/-300 basis points, the Cash Reserve Ratio (CRR) at 45%, and the Liquidity Ratio at 30%.

On a brighter note, Nigeria’s Gross Domestic Product (GDP) grew by 3.84% in the last quarter of 2024, compared to 3.46% in the third quarter. This growth was largely driven by improvements in the oil and non-oil sectors, especially services.

Still, Cardoso emphasized that these gains could be reversed if Nigeria does not address its heavy dependence on oil. He called for an urgent revamp of the country’s revenue structure and increased efforts to boost exports beyond crude oil.

Despite the worrying signals from the oil market, the governor said Nigeria’s recent reforms have helped prevent a financial collapse.

“We’ve taken tough decisions. Without those, the outcome would have been devastating,” he said.

As Nigeria enters a crucial economic period, the CBN’s message is clear: without strong fiscal reforms and diversified revenue sources, the country’s economy could face more serious hurdles in 2025.