Okonjo-Iweala blasts governors for depleting Nigeria's huge savings

The Minister for Finance, Ngozi Okonjo-Iweala, says Nigerians should hold the governors of the 36 states of the federation responsible for depleting the excess crude revenue account from $20billion in 2003 to about $3.6billion today.

The minister said Nigeria was able to survive the negative impact of the global economic crisis because it was able to augment its budget deficit and continue with most of its development programmes with revenues from a healthy Excess Crude Revenue Account.

But, Mrs. Okonjo-Iweala, who is also the Coordinating Minister for the Economy, told a meeting of civil society organisations on Thursday in Abuja that the country might not survive another global economic downturn, with a depleted Excess Crude Revenue Account.

The Minister said the 36 state governors should be held responsible for the massive draw down on the account, as the Federal Government was compelled to share over $16.4billion revenue accumulated in the excess crude account prior to the global economic depression, because they believed it was unconstitutional and illegal.

“The Excess Crude Revenue Account was developed at the time we had some semblance of fiscal balance in our economy between 2003 and 2007,” the minister said. “That was when we started saving up to about $20billion. When the crash came in 2008, oil prices fell from about $147 per barrel to about $38 overnight. We were able to go to that pool to smoothen our expenditures.

“We were able to pay salaries and continue to pay for our capital investments in those two or three difficult years (2008 to 2009). That is why the Excess Crude Account, which has metamorphosed into the Sovereign Wealth Fund (SWF), is very important.

“But, we have the governors saying no, it is illegal. In fact, it was a fight to even get $1billion paid into the SWF. We managed to save $20billion the last time, but now the governors are saying it is illegal. So, the country is not able to save, and what is left in the Excess Crude Revenue Account today is only about $3.6billion.

“Every month, we have been dipping hands and sharing it, instead of moving that money into the Sovereign Wealth Account, because the governors say it is illegal. We have shared until it is at the rock bottom. Should the oil price crash today, what it means is that we have no cushion, because $3.6 billion for this economy is nothing that can take us for any length of time.”

The Minister, who spoke on the various components of the government’s current reform agenda, stressed the need for the country to continue to create safety nets in the form of savings in order to cushion any potential negative effects of the volatility in the international oil market on the domestic economy should there be any further depression in the global economy.

In view of recent developments in developed economies such as the United States and Europe, Mrs. Okonjo-Iweala, said the country was facing increasing challenge controlling its expenditure and maintaining fiscal discipline to allow for sufficient money to be left for the development of critical infrastructure that would help position the economy on sustainable path of inclusive growth in the years ahead.

Describing the Federal Government efforts to diversify the country’s economy as the only viable option open to pursue in the face of dwindling revenues from crude oil exports as well as increasing volatility in the global oil market, the minister said ongoing transformation programmes in the agricultural and entertainment industries hold the key to Nigeria’s economic development and competitiveness in the rapidly changing global market.