Nigeria’s gross foreign exchange reserves continued declining, reaching $34.47bn as of end-December, down from $43.61bn at the end of 2013, central bank data showed.

The forex reserves of Africa’s biggest oil producer have been on a downward trend since August, when the local naira currency was hit by the fall in global oil prices, and the central bank increased its market interventions to support the exchange rate. On November 25, the central bank devalued the naira by 8% and raised its monetary policy rate by 100bp to a new a record high of 13% in a bid to stop the depletion of foreign exchange reserves. However, the stock of forex reserves has narrowed 6.8% since then, and pressure is remaining in view of the falling oil prices, which considerably reduce the build-up of forex reserves, and capital outflows related to shifts in foreign investor sentiment.

Nigeria relies on oil receipts for about 70% of government revenues, so the sharp drop in oil prices poses significant risk for the country’s fiscal outlook. Last month, the government cut its official GDP growth forecast for 2015 to 5.5% from a previous forecast of 6.35% due to the oil price slump. The country’s 2015 budget is aiming to diversify the economy away from being too heavily reliant on oil proceeds. It targets to raise non-oil revenue to 47% of total government revenue through various types of taxes and policies.

The latest available official data showed that Nigeria produced an average of 2.15mbpd of oil in Q3, down 2.7% q/q. The price at which Nigeria sold crude oil fell to $83.5 per barrel in October from last year’s peak of $114.6 in June. The 2015 budget counts on a benchmark price for oil of $65 per barrel and on a production of 2.27mbpd.