08 January 2015, Lagos – The Federal Government, yesterday, responded to the allegations made by former President Olusegun Obasanjo against the administration of President Goodluck Jonathan, including an alleged squandering of the nation’s $55 billion foreign reserve.
The Minister of Finance, Dr. Ngozi Okonjo-Iweala explained that the former President got it wrong, stating that former President Obasanjo left a gross reserve of $43.13 billion, comprising the CBN’s external reserves of $31.5 billion, $9.43 billion in the Excess Crude Account, and $2.18 billion in Federal Government’s savings in May 2007.
It stated that the reserve peaked at $62 billion in September 2008 under Yar’Adua when crude prices rose to $147 per barrel before falling to $31.7 billion in September 2011 as the Central Bank of Nigeria had to use much of it to defend the Naira, following the 2008-2009 global financial meltdown.
The ministry maintained that President Jonathan never in any way squandered the nation’s reserves, but appropriately utilised it in the course of normal transactions required for the development of the Nigerian economy.
The statement read in part: “It is absolutely not true that the administration of President Goodluck Jonathan squandered the nation’s reserves. The facts are clear and indisputable. At the end of May 2007, Nigeria’s gross reserves stood at $43.13 billion, comprising the CBN’s external reserves of $31.5billion, $9.43billion in the Excess Crude Account, and $2.18 billion in Federal Government’s savings.
“These figures can be independently verified from the CBN’s records.
“Secondly, it is a misconception to think that reserves are immutable or cast in stone. The reality is that since May 2007, the reserves have fluctuated in line with developments in the international oil market, rising from $43.13billion at that time, peaking at $62billion in September 2008 during the Yar’adua/Jonathan administration, when oil prices reached a peak of $147 per barrel, and falling subsequently to a low of $31.7 billion in September 2011.
This fall in reserves was largely a result of the vicissitudes of the global economy and oil market which caused the CBN to intervene, using some of the reserves, to defend the value of the naira.
“Thirdly, the excess crude savings which is a component of the reserves, was largely used to cushion the economy at the height of the global financial crisis in 2008-2009.
“Fourthly, it is true the savings in the ECA would now have been higher but for the fact that a number of governors, against strong professional advice, actively kicked against continuous building up of the ECA and, indeed, pushed for its sharing. It is on record that states even took the Federal Government to court on this matter.
“In the fifth place, it is also worth noting that the Jonathan administration built the first ever Sovereign Wealth Fund for the nation in which savings are being made for future generations and infrastructure investments.”