By Emeka Anaeto, Economy Editor
LAGOS — The nation’s economic challenges may have taken further negative turn, weekend, as external reserves declined further while oil prices dropped significantly in the international market.

Last weekend, Nigeria’s external reserve declined to $31.55 billion, losing about $350 million month-on-month.

This development is coming despite recent efforts of the Central Bank of Nigeria (CBN) to stabilize the external reserves, a key indicator of economic health. It is also coming just as the benchmark crude oil price (Brent) declined 5.5 per cent to $49.45 while the OPEC Basket price slumped 6.7 per cent to $47.10 amidst global oil glut last weekend.

The external reserves position measures a country’s sustainable ability to finance its imports and the volume is determined by interplay of inflows from exports (oil export income in case of Nigeria) and outflows in form of foreign exchange deployed to importations. Consequently, external reserves decline means outflow is exceeding inflow.

Responding to this negative inflow-outflow interplay, CBN had eliminated 41 items from its foreign exchange supply window last month and last week it also ordered banks to pay for forex demands upfront. CBN continues to resist pressure to devalue the Naira.

Emefiele had told the Senate in the first week of July that reserves had gone up to $31.9 billion from $29.1 billion attributing the positive development then to President Muhammadu Buhari’s measures of plugging leakages in the economy.

But barley one week after this presentation, the reserve began to decline prompting the apex bank to take several counter measures which seem not to have worked except the depreciation of the Naira in the black market which was halted but fluctuating last week.

Speaking at the Senate, Emefiele had said: “Reflecting the sharp fall in oil prices and speculative foreign exchange activities, external reserves declined from $37.3 billion in June 2014 to $29.1 billion as at the end of June 2015. Given our understanding that the fall in oil prices may not be transitory but permanent, and that some speculative activities were going on in the forex market, the CBN took a number of proactive countervailing actions.

“At the heart of the issues that currently confront our nation is the need for us to diversify the structure of our economy from being import dependent to being an economy that produces what she consumes.”