The Lagos Chamber of Commerce and Industry (LCCI) has called on government to exert energy on internal revenue drive and reduce cost of governance.
The Chamber said the call has become necessary following continuous fluctuation of oil prices.
At its quarterly economy review, its President Remi Bello noted, that the international price of crude oil is currently trending at a six-year low of $40 per barrel.
Bello observed that prices may crash further when Iran begins to enjoy its international pardon by pumping more oil into the already saturated market.
“This may further heighten the fiscal challenges presently facing the country. With this development, we are expecting further downwards adjustments in the budgetary benchmark of oil price which is pegged at $53 per barrel in the 2015 budget.
Further pressure on the value of Naira is expected as the development weakens the supply side of the foreign exchange market” he said.
The Chamber further noted that vulnerability of the Nigerian economy to external shocks is beginning to manifest with the collapse of oil crude oil price.
According to the president, The naira exchange rate is under pressure so is the foreign reserve; fiscal stability of the federal and state governments is at risk, as reflected in the inability of many public sector institutions to meet their financial obligations to contractors and civil servants.
He also observed that the incidence of abandoned projects is on the increase while capital flow reversals have intensified, manifesting especially in steady declines in the stock market.
The implications of this scenario, for the macro economy, he warned are quite profound and unsettling.