Resource-dependent countries are particularly vulnerable to macroeconomic shocks, most notably those resulting from fluctuations in commodity prices. The Federal Republic of Nigeria, with a maximum crude oil production capacity of 2.5 million barrels per day, ranks as Africa’s largest producer of oil and the sixth largest oil-producing country in the world.

The Nigerian economy is heavily dependent on oil revenue, and fluctuations in the production and price of oil have placed significant pressure on the fiscus. The FGN’s oil revenues decreased in 2015 and 2016 because of a sharp decline in the oil price and concurrent decrease in oil production.

The global price of oil fell from US$110 per barrel in January 2014 to US$29 per barrel in January 2016. This dramatic decrease in price was the result of excess oil supply associated with an economic slowdown in emerging markets and a reduction in US oil imports.