Sincere 9gerian:
On the use of reserves, it is fallacious to say that the nation’s external reserves were dipped intoor misapplied by the Federal Government. It is important to note that the Federal Government cannot dip its hands into 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 currency” – in other words, to defend the value of the Naira.

No President since the democratic dispensation has contravened this Act.
Other uses of the reserves are to settle both public and private sector foreign currency obligationsof Nigeria, including the importation of goods such as equipment for power sector. Whenever a ministry or agency of government needs to incur approved expenditure in foreign currency (e.g. payment of goods and services, settlement of externaldebt, etc) it must provide the naira equivalent to the CBN before the Bank sells the required foreign currency. As a former World Bank Vice-President for Africa, surely, Mrs. Ezekwesili must have known this.

We also found Mrs. Ezekwesili’s interrogation of the educational system somewhat disingenuous and borderline hypocritical. During her tenure as Minister of Educationbetween 2006 and 2007, she collected a total sum of N352.3 billion from direct budgetary releases. In addition, she received about N65.8 billion under the Universal Basic Education Commission (UBEC) Fund, and over N40 billion from the Education Trust Fund (ETF) during her time as Minister of Education. In view of these humongous allocations, a few legitimate questions arise. What did she do with all these allocations? What impact did it have on the education sector? One wonders if our educational system would have been better today if these allocations were properly applied.

No one disputes that Nigeria still faces challenges, most of which were built up over a long time. But we need to acknowledge the significant achievements of this administration in the aftermath of difficult but necessary macroeconomic and structural reforms being implemented in the country.

On the use of reserves, it is fallacious to say that the nation’s external reserves were dipped intoor misapplied by the Federal Government. It is important to note that the Federal Government cannot dip its hands into 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 currency” – in other words, to defend the value of the Naira.

ayox2003: OP, let me give you a cheesy analogy.

U are in an exam hall, an objective question says how much was left in the government coffers as at May 2007?

A) $67 billion

B) $43 billion

C) $20 billion

D) $31 billion

You don't know the answer. Let's assume the person sitting on your right is Ezekwesili, the guy on ur left is Maku.

Ezekwesili tells u the answer is A; Maku says its B. Your name is Sincere Nigerian, right? As a sincere nigerian, whose answer would you believe and tick?

Keep deceiving yourselves!


Disclaimer: This is just a cheesy analogy. Exam malpractice is a punishable offence!


Frawzey

"@omojuwa: Liebaran is a dog. A dirty one. Reno Omokri is sh*t . The dirty dog's sh*t"

Sincere 9gerian: Labaran Maku, Nigeria’s Information Minister, writes a rejoinder to a keynote delivered by Oby Ezekwesili at the 42nd convocation of the University of Nigeria, Nsukka and published on PREMIUM TIMES.

The recent statements by Mrs. Obiageli Ezekwesili at UNN’s convocation ceremony on January 24, 2013, betray a surprisingly limited understanding of government finances. These statements are even more curious in light of the fact that she has held senior positions in government, and more recently, a position as a Vice President of the World Bank. However, rather than speculate about her motives, we would focuson the facts.

The statement by the former WorldBank Vice President that the governments of Presidents Musa Yar’adua and Goodluck Jonathan have squandered $67 billion in reserves (including $45 billion in external reserves and $22 billion inthe Excess Crude Account) left by the Obasanjo Administration at theend of May 2007 is factually incorrect. At the end of May 2007, Nigeria’s gross reserves stood at$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 the Federal Government’s savings. These figures can be independently verified from the CBN’s records.

The figure of $67 billion alleged in her statement is therefore clearly fictitious.

However, since President Obasanjo left office, the reserves have experienced fluctuations, rising from $43.13 billion in May 2007, peaking at $62 billion in September2008 during the Yar’adua/Jonathan Administration when oil prices peaked at $147 perbarrel, and falling subsequently to a low of $31.7 in September 2011. This fall in reserves was a result of the vicissitudes of the global financial crisis which caused CBN interventions in the currency market to defend the value of the naira.

The Excess Crude savings, a component of the reserves, was also used to stimulate the economy at the height of the global financialcrisis to the tune of about $1 billion (or 0.5 percent of our 2009 GDP). As a result, Nigeria is one the few countries in the world that didnot seek assistance from international financial institutions. It should be noted that the fiscal stimulus used to shore up the economy during that period was shared by all 3-tiers of government, including commitments of about $5.5 billion made under the Obasanjo Administration for power projects.

On the use of reserves, it is fallacious to say that the nation’s external reserves were dipped intoor misapplied by the Federal Government. It is important to note that the Federal Government cannot dip its hands into 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 currency” – in other words, to defend the value of the Naira.

No President since the democratic dispensation has contravened this Act.
Other uses of the reserves are to settle both public and private sector foreign currency obligationsof Nigeria, including the importation of goods such as equipment for power sector. Whenever a ministry or agency of government needs to incur approved expenditure in foreign currency (e.g. payment of goods and services, settlement of externaldebt, etc) it must provide the naira equivalent to the CBN before the Bank sells the required foreign currency. As a former World Bank Vice-President for Africa, surely, Mrs. Ezekwesili must have known this.

We also found Mrs. Ezekwesili’s interrogation of the educational system somewhat disingenuous and borderline hypocritical. During her tenure as Minister of Educationbetween 2006 and 2007, she collected a total sum of N352.3 billion from direct budgetary releases. In addition, she received about N65.8 billion under the Universal Basic Education Commission (UBEC) Fund, and over N40 billion from the Education Trust Fund (ETF) during her time as Minister of Education. In view of these humongous allocations, a few legitimate questions arise. What did she do with all these allocations? What impact did it have on the education sector? One wonders if our educational system would have been better today if these allocations were properly applied.

No one disputes that Nigeria still faces challenges, most of which were built up over a long time. But we need to acknowledge the significant achievements of this administration in the aftermath of difficult but necessary macroeconomic and structural reforms being implemented in the country.

http://premiumtimesng.com/opinion/117413-ezekwesili-got-it-wrong-by-labaran-maku.html?wpmp_tp=1

ballabriggs:

Maku is a daft man that just talks anyhow. If he does not understand the link between reserves, fiscal policy and monetary policy the best he could have done is to keep quiet and not spew what he knows not about.

As government spending increases on consumption, the real exchange rate moves to a less competitive position and you either support the Naira with the reserves, raise interest rates or devalue the Naira.

What the CBN did at the time was to support the Naira for long with the reserves as government budget deficit grew. Again at that time there was a bail out of banks and raising interest rates was not an option. Devaluation was not also an option as it would have led to rising prices and further pressure on the reserves.

It is a technical issue and one will expect Maku to get a proper education or better still stick to drinking his 'fura de nunu' and not open his mouth on what he has no knowledge of how it works.

Tusky44: "The Excess Crude savings, a component of the reserves, was also used to stimulate the economy at the height of the global financialcrisis to the tune of about $1 billion (or 0.5 percent of our 2009 GDP). As a result, Nigeria is one the few countries in the world that didnot seek assistance from international financial institutions."

Really? Seek assistance from what international financial institution? Of course there was no need for that cos the mallam at the CBN foisted the local banks with some 600 billion naira loan after he alleged the economy would collapse as a result of the global financial meltdown. Soludo authoritatively told us we were insulated from the 2008 crises cos we were running a cash-based economy therefore, a credit crunch as it was called, had nothing to do with Nigeria's economy.

Maku just like his clueless boss GEJ, though i support him for 2015 ... is a very local breed. A local unintelligent mongrel, a glorified local champion like sincere9gerian.. That notwithstanding, GEJ for 2015 - 2019 in case you were already thinking i have changed my mind.

ayox2003: @Tusky and Koruji,

I don't trust them both - Sanusi and Soludo.

Soludo allowed people like Akingbola to enrich themselves from bad loans and paddy-paddy connection.

Sanusi still keeps interest rates at 12%. Retail/commercial banks lend from the CBN at 12% and lend to SMEs at 26%. Yet, Sanusi keeps saying government should reduce unemployment, while he's making it difficult for young entrepreneurs to be self-employed. He talks a lot.


Frawzey