ABUJA: The Federal Government, yesterday, raised an alarm over the decline in the global crude oil prices, saying that it is already putting in place stricter measures to cushion the effect of the drop on the Nigerian economy.
*Oil Vandals
“Nigeria has two to three months of rainy day savings to cushion it while contingencies are put in place should world oil prices continue to fall,” Ngozi Okonjo-Iweala, Co-ordinating Minister for Economy told theFinancial Times.
Okonjo-Iweala disclosed that should oil price dip below $78, the country would have to draw down on the Excess Crude Account (ECA).
She said, “Our intention is not to run in there and raid it, but even if prices continue to go down we can survive sufficiently for two to three months. That is the time needed to get other measures in place. What you don’t want is a hard landing.”
“Our buffers are slimmer this time,” Okonjo-Iweala acknowledged, adding that there is about $4bn in the ECA at present, $2bn short of what the International Monetary Fund had recommended.
She further stated that the country needs to ramp up our non oil revenues on the fiscal side, adding that global consulting firm, McKinsey, has been engaged to carry out an extensive review of revenue services in order to identify potential gains.
Okonjo-Iweala added that she was encouraged by an exhaustive data review, which saw Nigeria’s economy overtake South Africa’s as the continent’s largest, showing that the economy had diversified to a much greater extent than previously thought.
She said, “In an oil country you can never feel at ease exactly. But I feel we can master this situation because we have a diverse base.
“We will have to look very hard at recurrent expenditure, and identify overlapping agencies. When the price is heading down everyone sees the necessity but that doesn’t stop them hating you.
Okonjo-Iweala agreed, however, that lower oil prices would provide a stronger incentive to government to rein in oil theft, which has cost billions of dollars a year, and help to drive through stalled oil sector legislation to stimulate production.
“That would enable us to pick up quantity to help us cushion on the price side,” she said.
The Federal Government, which depends on oil typically for about 80 per cent of revenues, is assuming an oil price of $78 per barrel for its 2015 budget, up from $77.5 per barrel in 2013 and precariously close to recent world prices.
Nigeria was in a much stronger position last time the world price of oil tumbled, with about $22bn squirrelled away in the ECA. Those funds helped the country weather the 2008 global financial crisis with economic output relatively unscathed.
But during recent boom years the government has persistently used the ECA, dividing out the proceeds among the 36 states in the federation, which are constitutionally entitled to their share.
Nigeria also holds foreign reserves equivalent to $39″billion. These have come under recent pressure as the central bank has stepped in to prop up the naira, but still cover nine months worth of imports.
Nigeria’s ratio of non-oil tax revenues to GDP, at 4.5 per cent, is among the lowest on the continent. McKinsey helped South Africa broaden its tax base to the tune of about $3bn and Okonjo-Iweala believed similar gains were possible over the longer term in Nigeria.
www.vanguardngr.com

Are they just realising?? Oil prices are predicted to hit $70pb soon yet there seems to be no let up in Jonathan's looting spree.

Ok

The government should see the falling oil prices as an opportunity to diversify the economy. Agriculture is one major area we can use for that.
For how long are we going to depend on oil?

Nor b only raise alarm

Why won't the country shake...
When they depend on only oil money!!

Make God just help us ooo

That is a good reason why the country's economy should be diversified. We should not be putting all our eggs in one basket

No be then be the vandals
After checking for the price 81 and 86 dollars now there is going to be an oh sue I think

David mark and martin elechi are spot on telling us

Nigeria is @war and they will increase evil now to stall elections

don't trespass, space booked.

Why wont we be at risk when we rely too heavily on oil.Instead of us to diversify our economy, we were busy making jest of ghana.

I thought the unrest in the gulf &Middle east would ensure high crude prices..

Let the price continue to fall for all I care! Let's see how these thieving politicians won't change for good!

Nigeria has been raped for too long! You can see fat jaws finance minister speaking from an already prepared script.. ECA indeed, account that only exist in the National Dailies!!

This is what happens when you refuse to build your own refineries.

What has the average Nigerian benefittedd from oil in Nigeria to be @risk? He should say dem' politicians whom own several oil wells are @risk.....Am sure this is story for the cows as long as the youths are concerned

E no concern me
It wouldn't stop our politicians from doing what the knw best


LOOTING

They'll loose more...those who benefit more from it.

someone in the opposition (can't remember who) predicted this about a year ago and PDP dogs attacked him claiming the Nigerian economy is growing. we truly have reta*rds in power

They just noticed? A trend that has been anticipated long before now, with Shale oil and new oil discoveries found almost everywhere in Africa and Reservoirs that were seen as unprofitable are now profitable.
Global Economic growth is shrinking, even the Manufacturing power house like China's economic growth forecast has reduced. If the Supply for Oil outwit it demand greatly prices will drop. Gas supply also has increased from LNG plants across the globe. But even for 2015 budget we still pegged the price of Crude Oil above $75 per barrel. Even in an election year. That's sickening to say the least, plus a Military budget of close to 1 trillion this year in review and we still had to take a loan of $1billion dollars. Having 2 ministers in a Ministry, the National Assembly and Senate keep voting huge cash to themselves for sitting.


We all see where we are Heading!!!

When there's over dependence on oil as the country's source of revenue,raising alarm over drop in oil price is what you get.

Time to go back to agriculture.

Dis na Monday Ooº°
Yu can't begin a new week like dis

danaiks:
.

Bcoz them don embezzle almost all the money finish. They come dey complain say its declining. Just no increase the price for 2015 bcoz i know say na yur way be dat.

berem:
When there's over dependence on oil as the country's source of revenue,raising alarm over drop in oil price is what you get.
Time to go back to agriculture.

Lol....You will be the Minister of Agriculture

I'm sure they are already warming up to see how they can increase (pump prices) of the upstream sector in d oil industry since they are finding it difficult to continue their constant looting. .......smh

I don't really care about statistics. But i think it is interesting to know that, on the average, Nigeria generate 900 Billion Naira in revenue every month, from both oil and non oil sources.
It is also note worthy that 70% of Nigerians live below the poverty line, which is close to 2 dollars per day.
My question is if Nigeria generates such huge income every month, then how come the majority of the population is wallowing in poverty?? Really mind boggling! What is the money used for? I don't think it is for the development of this country either. Cos no electricity in my house for the past three days, the generator has been constantly up and running. The road to my house was constructed through the combined efforts of the residents of my street. Public schools are nothing to write home about. Our hospitals are ill equipped. Insecurity is the norm, not the exception..No social security e.t.c. In fact, nothing works in Nigeria.
Seems the 900 billion naira is utilized in funding the lavish lifestyles of our corrupt politicians, clergymen and unscrupulous businessmen.
It is high time we demand that the 900 billion naira be used for what it is actually meant to be used for.
#return our 900 billion naira

Oil increase/decrease, it does not affect garri

Diversify the economy

All is well....




Even in the oil wells .


Just some idiots lamenting simply coz there's is less money to loot

We saw this a long time ago. No nation survives on a product that is so volatile in the international market.