As oil price continue to plunge following Petroleum Exporting Countries’ (OPEC’s) refusal to cut production levels, Nigeria with its monolithic economy is caught midstream and forced to cut the 2015 budget by a whooping N300 billion
By Our Roving Correspondent
At the recently concluded 4th Annual Capital Market retreat held in Abuja, Finance and Coordinating Minister of the Economy, Dr Ngozi Okonjo-Iweala, stopped short of hanging pundits for breeding what she calls “panic into the economy”. She revealed that “we have built scenarios around $70, $65, and $60, so if oil price drops to $60 per barrel, we are ready with additional measures.
Panic, she said, was not a strategy, “and we will not give in to all those pundits who are trying to breed panic into the economy”. Confident as Okonjo-Iweala may sound, keen watchers told DESERT HERALD that the fact that during the week, oil price further shrunk unbelievably below Okonjo-Iweala’s last benchmark of $60 per barrel, was a major concern to the federal government. This scenario has started giving the Finance Minister jitters, in spite of her expertise.
Before the current drop to below $60 per barrel, the minister, from all indications, had no inkling that the oil price could drop to the present level, otherwise she could have built her so called scenarios further around $55, $50 and $45. This, according analysts, has faulted Okonjo-Iweala’s position that the drop in oil price did not come as a surprise.
“It was anticipated since 2000, which necessitated the mechanism for the excess crude account, to help Nigeria manage the volatility of oil prices”, the Finance Minister declared, dismissing insinuations by keen watchers of the economy that her economic team failed to give warning signals about the dwindling economic climate of the country.
She told participants at the 4th Annual Capital Market Retreat that “all those who are saying that we did not signal that there was a problem with the economy, I refer you to the five or six times it was said publicly and clearly; the signaling was there, the president backed us each time we talked about lowering the oil benchmark.
“Many people are familiar with the struggle to make sure we budgeted at a reasonable benchmark. I think it would be disingenuous on the part of many to say that they have forgotten the battle that we took the legislators but again there was a lot push backs, the benchmark was continuously raised and was put at $80 per barrel, some years ago, and we protested that this is not right,” she said.
The thinking among critics of the federal government’s economic policies under the supervision of Okonjo-Iweala is that President Jonathan’s economic policies are not working due to monumental corruption in high places all of which have gone unpunished.
For instance, the Excess Crude Oil Account, which was initiated to cushion economic squeeze arising from the sudden plunge of oil price, has been depleted following excessive pressures from state governments to get a slice from the ‘national cake’ and the frequent tampering of the account to service areas said not to be in the original plan of Okojo-Iweala’s Finance Ministry.
The way the Federation Accounts Allocation Committee, FAAC, meeting for November ended testifies to the position of analysts that the Nigerian economy is on the brink. The deadlocked meeting which had representatives of Nigeria’s 36 states and the Federal Capital Territory in attendance, accused the federal government of not accounting for about $1billion (N168 billion) of excess crude oil money.
The Chairman of State Commissioners of Finance, Timothy Odaah, said that no state knew how the $1 billion difference reported in the Excess Crude Account balance, between October and November, came about.
The FAAC meeting is a monthly ensemble of state finance commissioners and the federal finance ministry and the Accountant General of the federation, where federal oil receipts are shared between the federal and state authorities.
With falling oil price, the 36 states have turned more attention to the Excess Crude Account, which was depleted from more than $40 billion in 2007 to about $4 billion in 2014.
Though Mr. Odaah said the discrepancy has been noted for discussion at the next FAAC meeting, his disclosure called to question how transparent the management of the excess crude revenues is. Prior to the October FAAC meeting, the Minister of Finance, Ngozi Okonjo-Iweala, had told reporters that the balance of the Excess Crude Account stood at $4.11billion.
The minster also revealed that the country’s external reserves rose from $36.6billion in June to $39.48billion as at October 16. She also said the balance in the Sovereign Wealth Fund (SWF) stood at $1.55 billion.
Similarly, Minister of state for Finance, Bashir Yuguda, revealed that the current savings in the ECA had a balance of about $3.1 billion, raising questions about the $1billion difference.
Odaah had said in October that owing to the dwindling revenue allocation to the states from the federation accounts as a result of falling oil prices, the states had sent a request to President Goodluck Jonathan that $2 billion be shared, saying that the states had no knowledge how the balance suddenly dropped from $4.1 billion to $3.1 billion.
Worse still, the media propaganda about the job creation drive of the federal government, notwithstanding, there is widespread unemployment throughout the country.
Most of the small scale industries, which could have otherwise engage the youths in gainful employments, are comatose. Strikes have become the order of the day due to dwindling staff welfare. Citizens across the land struggling to eke out a living are caught up by increased taxation. Blood of innocent citizens cut down by Boko Haram, kidnappers, marauders and the rest. Anguish and corruption are on sale. Nigeria!