Has the FG squandered our money?: 7 ‘facts’ Okonjo-Iweala wants you to know about Nigeria’s reserves By Dare Lawal Nigeria’s minister of finance, Ngozi Okonjo-Iweala, has issued a statement which states the position of the federal government on the contentious issue of the depletion of the nation’s excess crude account and foreign reserves. In recent times, that issue has made the headlines as several Nigerians, including former president Olusegun Obasanjo, have used it to attack the records of the Jonathan administration. The minister attempted to raise seven “facts” in her statement which was titled: “The Facts about Nigeria’s Excess Crude Account and Foreign Reserves Position.” Okonjo-Iweala Fact 1: The Goodluck Jonathan administration has not squandered the nation’s reserves. Okonjo-Iweala described any insinuation to the contrary as “absolutely not true.” She said that Nigeria had gross reserves of $43.13 billion at the end of May 2007 when President Olusegun Obasanjo was leaving office. Of that figure, $31.5 billion was external reserves, $9.43 billion was in the Excess Crude Account, and $2.18 billion was Federal Government’s savings. Her point was simple: the figures which people like Obasanjo were stating, of leaving $67 billion as gross reserves was “factually incorrect.” Okonjo-Iweala Fact 2: The minister wanted Nigerians to know that reserves are not immutable or unchanging. Since that May 2007, there have been several fluctuations in the international oil market, so the gross reserves have moved from $43.13 billion to the massive $62 billion which it reached 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. Why did it fall like that? Well, as the world economy shook and oil prices fluctuated, the CBN had to intervene at some point, so it used some of the reserves to defend the value of the naira. Okonjo-Iweala Fact 3: Remember she told us earlier that the gross reserves of the nation was made up of external reserves, money in the excess crude account and then government savings. The minister mentioned that the savings in the excess crude account was used to cushion the economy at the height of the global financial crisis in 2008-2009. According to her, that move helped. Subsequently, Nigeria was one of the few countries in the world that did not seek assistance from international financial institutions during the economic crisis. She said monies released to stimulate the economy was shared by the 3-tiers of government, and used to pay for fuel subsidies. Okonjo-Iweala Fact 4: Everyone is now pointing accusing fingers at the FG, and this displeases the minister because according to her, the savings in the excess crude account could definitely have been far more than what is currently in it if not for the fact that several governors, some of whom are among those criticising the FG now, were opposed to any addition of money into the account. The governors just wanted the monies to be shared and when the FG refused to yield, the governors took the Federal Government to court, a case which Okonjo-Iweala Fact 5: The minister reminded Nigerians that this administration “built the first ever Sovereign Wealth Fund for the nation in which savings are being made for future generations of Nigerians and important infrastructure investments are being supported. It is also a matter of public knowledge that the Fund would have generated more savings and investments if the same sort of opposition that blocked savings in the ECA had also not been at work.” Okonjo-Iweala Fact 6: Meanwhile, according to Okonjo-Iweala, about $5.5 billion in the excess crude account was drawn based on an agreement between the FGN and State Governors in 2009, for it to be invested in Independent power projects. “Today, various State governments are shareholders in the projects and hold share certificates confirming their stake in the projects,” she said. Okonjo-Iweala Fact 7: In conclusion: Okonjo-Iweal said that the FG has not stolen or misapplied the nation’s external reserves. She said: “Anyone familiar with foreign reserves management will be aware that the Federal Government cannot dip its hands into the external reserves. Like in other countries, the management of external reserves is one of the statutory mandates of the Central Bank of Nigeria (CBN). Section 2 sub-section (c) of the CBN Act (2007) states that the Bank shall “maintain external reserves to safeguard the international value of the legal tender” – in other words, to defend the value of the Naira. No President since the democratic dispensation has contravened this Act. “The reserves are also used to settle both public and private sector foreign currency obligations, including the importation of goods such as equipment for power sector. Whenever an Agency of Government or a private individual/company needs to make a payment in foreign currency (e.g. payment of goods and services, settlement of external debt, etc) it must provide the naira equivalent to the CBN in exchange for the required foreign currency.”
Posted on: Thu, 08 Jan 2015 20:31:09 +0000
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