The Conference of the National Council on Finance and Economic Development (NACOFED) has said the significant fall in global oil prices and oil production hiccups in the domestic affairs have had adverse impact on the revenue stream of the Nigerian economy and called for urgent steps towards diversification.
But the Coordinating Minister for the Economy and Finance Minister, Dr. Ngozi Okonjo-Iweala, who raised the alarm of falling oil prices a few days ago, gave an assurance that contingency plans were being made to keep the economy stable while the excess crude account is built to cushion the effect of further drop in oil prices on the international market.
Frowning on the proponents of ‘share all revenues collected’, whom she said forgot that Nigeria was saved from plunging into a financial mess in the aftermath of the 2008/2009 global economic crisis because it had a $22 billion excess crude account (ECA), which it resorted to, Okonjo-Iweala said the federal government was already re-building the ECA to a level which, according to International Monetary Fund (IMF) standards, is comfortable.
The finance minister told THISDAY in an interview at the conclusion of the 2014 IMF-World Bank meetings in Washington DC: “Now we are trying to build the ECA up again. We did our modelling and forecast at $5 billion. If we can save that, it will save us for a little while. The IMF did its own model and said we need about $6.3 billion in that ECA minimum, to cushion us. Right now we have $4.05 billion, so we have a gap of $2 billion. All this time we have been shouting let us save and not share…We will try to manage the best we can.”
“We all want the best for our country, which is to make sure that our reputation for keeping a stable economy is sustained. We don’t want one in which the exchange rates is fluctuating, most Nigerians don’t want it. You have to relate the level of reserves and the amount of money in the ECA to the exchange rates, that’s what keeps it stable. If you now go spending everything and you have a crisis and the oil price fall, you will not have anywhere to turn. And this is what we have been preaching for the past three years and we are being harassed because of it but now we are seeing it happen. What we are doing is that we are making contingency plans to keep the economy steady as much as we can through this crisis,” she added.
NACOFED also directed that steps should be taken to facilitate the early processing of the request from states for the floatation of bonds and issue of Irrevocable Standing Payment Orders (ISPOs) while it urged the states to observe the regulations guiding internal and external borrowings.
It said there was need to broaden and improve on revenue generation to finance government expenditures, as well as sustained effort by the governments in arresting the current challenges in the oil and gas sector particularly the vandalisation of oil and gas installations and crude oil theft.
According to highlights of its resolution reached at the end of the 2014 Conference of the National Council on Finance and Economic Development (NACOFED), which was held in Enugu State, it announced a collaboration between the federal and state finance authorities to work towards broadening and improving revenue generation as a means of effectively financing government expenditures.
The resolution, a copy which was made available to THISDAY among other things noted that though the world economic outlook remained uncertain, the Nigerian economy had continued to show strong resilience despite the current security challenges.
It also commended President Goodluck Jonathan on his efforts towards resolving the security challenges in the country
While calling for good governance, transparency and accountability at all levels of government, it further resolved that “the Chairman, Federal Inland Revenue Service (FIRS) be approached to assist the states being owed and the state governments were also urged to look into the issue of loans they owed the Federal Government.”
Also, it said the issue of the refund to state governments on the expenditure incurred for rehabilitation and renovation of federal roads be further looked into while states were however urged to ensure that due process is followed in undertaking such projects in order to merit refund.
by Kunle Aderinokun in Lagos and James Emejo .