Central Bank of Nigeria
Long-Term Outlook, Nigerian Economy, Medium Term Outlook, Economy
The Nigerian economy was in a deplorable state prior to the introduction of various policy and structural reforms in 1986. During the period of oil boom (1973-80), the production and consumption patterns in the country became import- dependent. With the collapse of oil prices in mid-1981, a foreign exchange crisis emerged. Foreign exchange earnings declined from US $25.9 billion in 1980 to $7.2 billion in 1986 with adverse consequences for the economy. The balance of payments came under severe pressures, swinging from a surplus ofN2.4 billion in 1980 to a large deficit of N3.0 billion in 1982. External debt increased as external borrowing was resorted to, and unpaid trade bills accumulated. Foreign creditors were reluctant to grant further credit facilities to the economy. The resultant inability of the industrial sector to import raw materials and spare parts led to reduction in production, retrenchment of workers and rationing of scarce essential commodities. Domestic inflation and unemployment worsened. An overvalued naira exchange rate, which favoured the propensity to import, created price distortions, destroyed productive incentives and contributed largely to the decline of the agricultural sector. The Gross Domestic Product (GDP) declined persistently from 1981 through 1986 except in 1985. Fiscal imbalances in the public sector deteriorated further. The demand management policies designed to turn the economy around proved to be mere palliatives in addressing the fundamental problems facing the economy.
CBN Economic and Financial Review
Ahmed, Abdulkadir (1990). Perspectives on Medium to Long-Term Outlook for the Nigerian Economy. CBN Economic and Financial Review. 28(4), 37-47.