Whereas the current fall in oil prices is a global phenomenon, the pangs are more on some countries  than others. Expectedly, those mostly affected by the declining oil price are those with import based economies built on oil as the main source of national revenue. According to the Organisation of Petroleum Exporting Countries, OPEC , Nigeria, Angola, Venezuela, Azerbaijan and Russia are the countries mostly affected by the falling currency value. In a paper showing the impacts of recession on the global oil market, OPEC said the five countries were picked among several others as showing the most serious effects of a fall in currency value. OPEC acknowledged that devaluations  in the currency value is common in the oil exporting countries,  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. “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 policies 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,’’ OPEC said. ‘’An unwanted consequence is almost always the rise in inflation and household prices, along with a decline in living standards and stalled economic growth,’’ OPEC said, noting that governments of the affected countries were forced to devalue their national currencies in order to stem the rapid outflow of foreign reserves. OPEC cannot be faulted in this regard. For instance, Nigeria, which prides itself  as Africa’s largest economy has been hit hard by the falling oil prices.  The nation’s currency – the Naira, dropped against the dollar by more than 52 per cent over the past year. At the last count, $1 Dollar was exchanged for N370 at the open market. The result has become higher price of products across the board and high inflation rate. On January 20, the Federal Government requested a  $3.5 billion loan from the International Monetary Fund (IMF) and the African development Bank to plug its $15billion budget deficit. The country’s oil revenues are expected to fall by 70 per cent before the end of this year, 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.  Azerbaijan, a former Soviet Republic also requested  a $4 billion emergency loan from the IMF and the World Bank in order to cover losses caused by low oil prices. The situation is not different with Venezuela. Its economy is on the verge of collapse. A combination of bad luck and poor policies are said to be major factors responsible for the near collapse of the economy. The economy of Venezuela is largely based on the petroleum sector and manufacturing. Revenue from petroleum exports accounts for more than 50% of the country’s GDP and roughly 95% of total exports.

Ogie Omelegie
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