The Minister for Finance and Coordinating Minister of the Economy, Mrs. Ngozi Okonjo-Iweala has disclosed that for Nigeria’s economy to retain its current stability, the Excess Crude Account (ECA), which has been reduced to $4.1billion, , must be increased to $5billion or above.
Invariably, the federal government will need to inject about $900million (N144 billion) to raise the ECA to the required level of $5billion.
Okonjo-Iweala made this disclosure yesterday in Abuja while fielding questions from members of the Senate Committees on Finance and National Planning during consideration of the 2015-2017 MTEF as a working document for the 2015 Budget.
“I think that the Excess Crude Account was built to be able to cushion us at times like this, when we have some kind of difficulties and I think it played that role to perfection during the crises of 2008, when oil fell to 38 to 40 dollars per barrel, even worse than what we have now. At that time we still had saved up quite a lot of money as such we were able to draw at least for a quite a few months to carry the economy.
“We have calculated that in order to help us regain this stability, we need a minimum of about 5billion dollars and anything about that is good. The IMF actually calculated 6.3 billion to be maintained in that account”, the minister further explained.
The minister added that, “It helps to cushion our exchange rate; so if we go and withdraw it abruptly beyond that amount it causes a problem and you know we went down to 2 billion last year and then we built it up to 9 billion and there was insistence that we must share, which made it to come down to $2 billion but we later, at least built it back to $5billion .Right now we are at 4.1 billion”.
She, however, insisted that Nigeria is not broke in spite of some cash fluctuations in the system, saying that operational delay in finance does not mean the country is broke, arguing that funds can be raised through some other assets of the country if the need arises.
Specifically responding to a question on whether the 2015 Budget would be a workable one or not, based on its proposed parameters in the MTEF document, the minister said whatever oil price benchmark will be approved by the National Assembly, the most important thing is for the country to arrive at a price that will give leverage for enormous savings against times like this.
The Senate is to consider the proposal by the federal government to peg oil benchmark for the 2015 budget at $78 per barrel, which is contained in the Medium-Term Expenditure Framework (MTEF) recently submitted to the National Assembly by President Goodluck Jonathan.
“Whatever the decision will be, even if we agree on another benchmark, we still need measures to be in place, because we have no idea on whether the oil price will continue to drop or go up”, the minister stressed.
Chairman of the Senate Committee on Finance, Ahmed Makarfi (PDP Kaduna-North), who chaired a closed meeting yesterday, told journalists that “You will know whatever amount we arrived at when we submit our report”.
Meanwhile, concerned by the reported sorry state of the nation’s economy, the House of Representatives yesterday summoned the Minister of Finance and Director General of the Budget Office, Bright Okogwu.
Chairman, House Committee on Public Accounts Rep Solomon Adeola (APC Lagos), in an interview with journalists expressed concern over the inability of the Federal Government to release statutory allocations to various ministries, departments and agencies (MDAs) since July 2014.
This was as he revealed that the committee’s report urging the National Assembly to scrap the Service Wide Vote from the annual budget would be ready soon.
According to the lawmaker, the Finance Minister and the D-G budget are to explain to the House, the non- release of the statutory grants of all ministries, agencies and departments since July.
Adeola said the Finance Minister’s assertion that nation’s economy is healthy is not true, as only the Service-Wide vote performed 100 percent while the main Budget’s performance stands at 40 to 45 percent annually.
“If you listen to the Minister of Finance as she was talking about budget performance, you will be shocked, because she will give you the picture that the budget as passed by the National Assembly is truly performing.
The lawmaker further stated: “The last all the agencies of government have gotten is the second quarter. Many of them have not been cash-backed. To me, the question is: Is Nigeria broke?
“If Nigeria is not broke, there have not been any issue of war in the Niger Delta region, which constitutes more than 60 or 63 percent of our generated income.”