Nigeria’s Minister of Finance Ngozi Okonjo-Iweala, has said that Nigeria needs to raise its excess crude account, which currently stands at $4.1 billion to $5 billion in order to sustain stability of the economy.
Nigeria’s Vanguard newspaper report on Tuesday said that Okonjo-Iweala told the Senate committees on Finance and National Planning, during consideration of the 2015-2017 Medium Term Expenditure Framework (MTEF) on Monday in Abuja that the excess crude account was built to be able to cushion us at times like this.
She explained that when the country had 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”.
“We have calculated that in order to help us regain this stability, we need a minimum of about 5 billion 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 two billion last year and then we built it up to nine billion and there was insistence that we must share which made it to come down to $2 billion but we later at least built it back to $5 billion. Right now we are at 4.1 billion,” she said.
Although, none of the committee members at the meeting could disclose the benchmark arrived at during the session, Vanguard gathered that members of the Red Chamber in the two committees opted for $78 oil price benchmark.
In the 2015-2017 MTEF, the executive had proposed the $78 oil price benchmark for the 2015 budget.
The minister told the committees that: “Every country faces a certain amount of risks and uncertainty at different times, so it is how you manage it that is a problem.”
“Are we prepared with a list of measures that can help us manage any of these outcomes? Have we thought through the various scenarios to say if anything happens? Yes, at the present time, we are reasonably stable compared with other countries but if those risks materialize, we need to have action in order to keep the economy stable,” she added.