10 December 2013, Abuja – The Excess Crude Account, which has dropped to $3.3bn in recent times, may deplete further to $2.5bn as soon as certain payments are made to the oil sector, the Minister of Finance, Dr. Ngozi Okonjo-Iweala, said on Monday.
While speaking on the performance of the economy at a breakfast meeting organised by the Nigerian Economic Summit Group in Lagos on Monday, Okonjo-Iweala argued that the huge drop in the ECA was necessary in order to shore up the economy
She said, “The Foreign reserves have dropped to about $44bn. The Excess Crude Account has dropped to about $3.3bn. And what is that? It means that when certain payments are made to the oil sector, we expect it to go down to about $2.5bn.
“It means a huge amount has to drop from the Excess Crude Account to be able to shore up the economy.”
Concerns have mounted in recent times over the depleting rate of the foreign reserves and the ECA.
The Federal Government had recently withdrawn $1bn (N160bn) from the ECA, bringing the balance to $3.59bn. President Goodluck Jonathan approved the withdrawal to augment the shortfall in revenue to the Federation Account. The amount in the account as of the beginning of this year was about $10bn.
The country had experienced persistent decline in oil revenue owing to theft and pipeline vandalism. The government had said if crude oil theft continued, revenue loss this year could rise to $12bn.
Okonjo-Iweala told the audience at the NESG meeting that the economy was doing well, stating that the International Monetary Fund’s Article 14 Consultation Result, which has just been released, indicated that the Nigeria’s “economy has continued to perform very well into the third quarter of 2013.”
She, however, said the growth witnessed in the economy was mainly driven by the non-oil sector, which contributed about 87.50 per cent to the Gross Domestic Product in the third quarter, while the oil sector contributed only 12.50 per cent.
Some of the sectors that have contributed to the growth of the economy, according to her, are telecommunications, 24.42 per cent; manufacturing, 8.16 per cent; building and construction, 14.6 per cent; real estate, 10.35 per cent; and agriculture, five per cent.
The minister emphasised that inflation was 7.8 per cent at the end of October, showing a continual downward trend for the 10th consecutive month, down from 12.3 per cent in December 2012.
She added that the naira to the dollar exchange rate had also remained fairly stable, currently standing at N155.2 to a dollar.
Okonjo-Iweala admitted that the economy was growing but not creating enough jobs, adding that there were two major challenges facing the economy.
According to her, the economy needs to grow at about nine or 10 per cent rate to be able to drive job growths needed to push the economy forward.
As a result, she said some policies would be put in place to drive growth in certain sectors of the economy.
Secondly, she said inequality was rising among the citizenry, pointing out that only 10 per cent of the population were benefitting from the economy growth created so far.
She gave the assurance that the government would remove structural bottlenecks in the way of the private sector to pave the way for more job creation.
On the 2014 budget, the minister said the government would implement a fairly tight budget in 2014.
She added, “The oil benchmark proposal is $74 per barrel. We want the National Assembly to push it to $76.5. We did $79 last year; 2014 will be challenging because of the elections. If we don’t make it tight, the elections will unravel all the macroeconomic stability we have achieved so far.”
– The Punch