We Need $5billion To Stabilise Economy -Okonjo-Iweala

Posted by African Examiner Featured, Latest Headlines Monday, October 27th, 2014

Ayodele Afolabi, Abuja

The Minister of Finance and Coordinating Minister of Economy, Dr (Mrs) Ngozi Okonjo-Iweala has said that for Nigeria’ s economy to retain its current stability, the excess crude account which has been depleted to the tune of $4.1billion now, will have to be jerked up to nothing less than $5billion.

She made the declaration in Abuja while fielding questions from members of the Senate committees on Finance and National Planning during Consideration of the 2015-2017 Medium Term Expenditure Framework (MTEF) as a working document for the 2015 Budget.

She also insisted that Nigeria is not broke in spite of some cash fluctuations in the system.

Her words: “Nigeria as a country has quite enough assets and I think anybody inside and outside will agree to that. That is why is very difficult when people say the country is broke, I say absolutely not because if we wanted to mobilise any of our assets to cover, we could do that. Of course it could take a little bit of time.

“However that does not mean that we cannot have some cash flow fluctuations, we just have to manage it because we have an economy that is reasonably self sufficient. We are able to manage ourselves well and everybody is willing to do a few things we should be able to get there.

“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.

Her words: “My belief is no matter what is settled on at this point in time, what is pleasing and that brings us all together is the realisation that what we were trying to say a few years ago has happened and it is happening in front of us and all of us need to come together to find a solution.

“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.”So I think we need to prepare ourselves in two or three scenarios and we can share some of the scenarios that we have been thinking about that will guide our development of those contingency measures.

“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.

“I am very proud that time, sitting at the world bank, Nigeria was one of the few countries that didn’t come to the IMF and the world bank for urgent support.

“Now, you need a certain amount there to cushion at any one time. Before you spend the rest you need a certain amount and I think what happened even after the need for augmentation the amount continued to be shared that was where the mistake was made and habit set in so that when we came and even for the few months we met the full amount there was still insistence on augmenting and sharing.

“If you do that it means that during this time, when you really actually need the money you don’t have enough. 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.

“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 build it back to $5billion .Right now we are at 4.1 billion.

“However it was not clear at the end of the meeting whether the Senate eventually approved the $78 oil price bench proposed for the 2015 budget in the document as non of those who participated in the meeting was ready to volunteer information to that effect.