The gradual depletion of our foreign reserve is an indication that the country is on the brink of economic collapse. The foreign reserve is the country’s backbone; our contingency, our back up, but now we have all but spent them all in trivialities. What should we do in a more critical economic situation than the one we are currently experiencing?
A high foreign reserve not only serves as a protective contingency fund for the country in times of crisis but helps beef up the economic image of the country in the international scene.
Now that our foreign reserve is but depleted, the economic image of the country is in tatters and the country is now exposed to numerous economic factors that can harm it because she has exhausted her backup.
The dwindling crude prices have continued to impact negatively on our economy. Our currency, the Naira has continued to fall miserably in the foreign exchange market; prices of commodities have continued to skyrocket causing inflation. If we had a robust foreign reserve, we wouldn’t have felt the impact of this crisis to this extent. If we had saved enough in the time of plenty, we wouldn’t be running helter- skelter as to what to do now. If we had not solely depended on oil and had diversified our interest to other revenue generating sectors of the economy, we wouldn’t be in this quagmire.
Our country can be likened to a man with little amount of money in his wallet but a zero amount in the bank. Think about it: Suppose something bad befalls him suddenly? Suppose he was suddenly summoned to the village to attend to his sick mother? Suppose his wife got involved in an accident? What would this man do? What would be his next option? Borrow?
Our country had borrowed a lot, piling up debts here and there, reducing our economic image in the world scene and contributing to the depreciation of our currency.
Past experience had shown that borrowing cannot help us; it will rather worsen the situation. We have to look inwards to other areas of the economy that we can exploit for our revenue generation. Areas like manufacturing and production should be highly encouraged. Importations should be curtailed and a saving culture should be adopted should we go back to the time of plenty again.
The current crisis should teach everyone a hard lesson. We should prepare very well not to be caught unawares again by a similar circumstance.