.com.ng



Former President Olusegun Obasanjo has criticized the proposed oil benchmark of Nigeria’s 2015 budget, saying it puts Nigeria’s economy in a bad position.

Speaking on Wednesday, at the presentation of an autobiography of the former president of the Court of Appeal and pioneer chairman of the Independent Corrupt Practices and Other Related Offences Commission (ICPC), retired Justice Mustapha Akanbi in Abuja, Obasanjo said the country may end up borrowing to pay salaries.

Although, the Federal Government had proposed a review of the oil benchmark from 77.5 dollars to 73 dollars for the 2015 budget, following continued decline in oil prices, the former president, apparently oblivious of the new development said “With the figure of $78 per barrel as benchmark, we will be in a bind if oil price falls to $75 per barrel.

“I am made to understand that Saudi Arabia used $68 as benchmark for the 2015 budget. Our inadequate protection of almost all local industries with heavy cost of energy has dealt a hard blow on most indigenous industries,” he pointed out.

Obasanjo said that if the country does not expedite action and do something about the current situation, it will get to a point where Nigeria would not be able to fund its budget. “We may have to borrow to pay salaries and allowances”, he said.

He also described the administration of President Goodluck Jonathan as one supportive of corruption. This, he said has greatly harmed the economy.

“For quite some time, the covered and hushed up corruption has had its toll on the economy,” he said.

He also stressed the need for Nigeria to diversify its economy, saying “Our continued heavy dependence on one commodity has not adequately prepared us against any shock in that one commodity in the international plane.”

The price of OPEC basket of twelve crudes stood at $73.70 a barrel on Wednesday.

Former President Olusegun Obasanjo has criticized the proposed oil benchmark of Nigeria’s 2015 budget, saying it puts Nigeria’s economy in a bad position.

Speaking on Wednesday, at the presentation of an autobiography of the former president of the Court of Appeal and pioneer chairman of the Independent Corrupt Practices and Other Related Offences Commission (ICPC), retired Justice Mustapha Akanbi in Abuja, Obasanjo said the country may end up borrowing to pay salaries.

Although, the Federal Government had proposed a review of the oil benchmark from 77.5 dollars to 73 dollars for the 2015 budget, following continued decline in oil prices, the former president, apparently oblivious of the new development said “With the figure of $78 per barrel as benchmark, we will be in a bind if oil price falls to $75 per barrel.

“I am made to understand that Saudi Arabia used $68 as benchmark for the 2015 budget. Our inadequate protection of almost all local industries with heavy cost of energy has dealt a hard blow on most indigenous industries,” he pointed out.

Obasanjo said that if the country does not expedite action and do something about the current situation, it will get to a point where Nigeria would not be able to fund its budget. “We may have to borrow to pay salaries and allowances”, he said.

He also described the administration of President Goodluck Jonathan as one supportive of corruption. This, he said has greatly harmed the economy.

“For quite some time, the covered and hushed up corruption has had its toll on the economy,” he said.

He also stressed the need for Nigeria to diversify its economy, saying “Our continued heavy dependence on one commodity has not adequately prepared us against any shock in that one commodity in the international plane.”

The price of OPEC basket of twelve crudes stood at $73.70 a barrel on Wednesday.

It gets worse.

Crude oil is $68.39 this morning. Analysts fear it may go as low as $50-45.

We're in for it this time.

Obasanjo talking rubbish as usual.

The FG is already cutting costs especially in recurrent expenditures, infrastructural cuts will also be made so the budget of 2015 is expected to be lower than that of the past 5 years. It is the state govts with their irresponsible attitude to the commonwealth that will be hard hit.

The governors have already started begging the FG for more.

And a state like Osun with one of the lowest IGR and federal allocations has been operating an increasing deficit budget for 4 years straight with much of the resources used to fund the budget coming from bonds ad loans.

This is the problem.

The benchmark should never have been pegged at 78$, it should have been 70$.

nigeria is only meant for the elites,i wouldn't be surprise if we start importing brooms,baskets,gari...though it has started happening...i once saw a broom with label*made in china*

onatisi:
The benchmark should never have been pegged at 78$, it should have been 70$.

The budget should never had been proposed on one resource alone.

Okonjo pegged it at $73 but the Janjawiids thugs in the national assembly wanted it at $80.

Here you ram governor

40% reduction in Osun’s federal allocation unjustifiable – Aregbesola

APRIL 18, 2014 BY ADE ADESOMOJU


Governor Rauf Aregbesola of Osun State has described as unjustifiable a 40 per cent reduction in the federal allocation being received by the state since July 2013.
Aregbesola spoke in Lagos on Thursday during the launching of a book, ‘Yoruba Elites and Ethnic Politics in Nigeria: Obafemi Awolowo and Corporate Agency.’ The book was written by an associate professor at the University of California-Davies, Wale Adebanwi.
The governor said the reduction had no basis as the nation’s oil revenue did not fall.
He said, “If there is anything my state does not have now, it’s money. We are managing with 40 per cent reduction in our allocation from the Federal Government. It is not as if I even enjoy saying I depend on the federal allocation, but the truth is that there is no magic that I would have made to suddenly taken our state out of  dependence on the federal allocation.
“It is important for us to know that there is no justification for that 40 per cent reduction in our allocation. The price of crude oil has remained almost the same at $108 per barrel, and the benchmark, according to them, is $75 per barrel.”
According to the governor, the state is now being forced to source for funds outside the federal allocation in order to meet its responsibilities of paying the entitlements of civil servants and retired workers.
He said, “So we are not close to the benchmark of $75 and yet since July of last year, there is a 40 per cent reduction in our allocation.  What that translates to I will tell you.
“It means I have to get N5.4bn to augment salaries and pension from July to December; N5.4bn extra, outside allocation, to ensure that since civil servants who are still active and those who have retired are paid their entitlements.
“What I receive from federation account is not sufficient to pay salaries.”
The governor, who represented a former governor of Lagos State and National Leader of the APC at the event, Bola Tinubu, who was the chief presenter of the book, bought copies of the new book at N5m on behalf of the Osun State.
He bought copies of the book  on behalf of himself with N500,000 and announced N2m for the launching of the book on behalf of Tinubu.

......

MudRaker:
Obasanjo talking rubbish as usual.

The FG is already cutting costs especially in recurrent expenditures, infrastructural cuts will also be made so the budget of 2015 is expected to be lower than that of the past 5 years. It is the state govts with their irresponsible attitude to the commonwealth that will be hard hit.

The governors have already started begging the FG for more.

And a state like Osun with one of the lowest IGR and federal allocations has been operating an increasing deficit budget for 4 years straight with much of the resources used to fund the budget coming from bonds ad loans.

This is the problem.

so as it is now the fg is making spending cuts but state goverments aren't. Okay isn't there any way for cbn or the fg to make banks stop lending to these state govts?

onatisi:
so as it is now the fg is making spending cuts but state goverments aren't. Okay isn't there any way for cbn or the fg to make banks stop lending to these state govts?

IMO state has since been blacklisted but the CBN can't do anything with respect to bonds.

I foresee state governors selling vast acres of land to Chinese firms.

This will be akin to selling your furniture to pay your mortgage.

Obasanjo is a foolish man

MudRaker:


The budget should never had been proposed on one resource alone.

Okonjo pegged it at $73 but the Janjawiids thugs in the national assembly wanted it at $80.

Here you ram governor

if reports from most apc states is anything to go by it is obvious apc governors know nothing other than borrowing money. I have been studying the causes of the drop in global oil prices and it may be a temporary thing but the future of oil prices is somehow gloomy.

MudRaker:


IMO state has since been blacklisted but the CBN can't do anything with respect to bonds.

I foresee state governors selling vast acres of land to Chinese firms.

This will be akin to selling your furniture to pay your mortgage.

that answers my question,which means cbn has the capacity to stop banks from lending money to these borrowing states .the problem is two phase. The fg needs to diversify from oil and start bringing up other areas which can bring in money,just like the uae has done and is still doing. Uae makes lots of money from tourists,businesses and that is why they keep making their country a toursit attraction to the world. China too has done a similar thing by making macau a gambling place and thereby surpassing las vegas. Secondly ,state govt too need to look inward at which aspect of their states they can invest on .nigeria is a country with countless business opportunities.

onatisi:
The benchmark should never have been pegged at 78$, it should have been 70$.

Bro,it is not so much about a rigid focus on benchmark as even Obasanjo insinuates. Issues are about Nigeria putting in place adequate contingency plans that recognise the economic reality and volatility attached to depending on oil earnings in a world where Shale and many other convergent developments (cheaper and more practical cost of solar energy and other renewable/clean fuel, mass produced electric cars, political/economic one-upmanship battles changing the energy dynamics et al) glaringly indicate that oil prices may drop drastically.

What good would your suggested $70 per barrel benchmark be if crude falls to $50.00 per barrel within that budget period? This is nothing but an indictment of how hideously corrupt/profligate and shockingly bereft of foresight/responsibly responsive leadership the GEJ government is. Let us shun political bias and call a spade a spade abeg. We are dealing with atrocious economic mismanagement 101 here. No need to start blaming 'benchmark'and other trivial side issues that are really not pertinent to the overarching and much deeper fundamental failure of the FG to do the right thing and plan effectively.

Gbawe2:


Bro,it is not so much about a rigid focus on benchmark as even Obasanjo insinuates. Issues are about Nigeria putting in place adequate contingency plans that recognise the economic reality and volatility attached to depending on oil earnings in a world where Shale and many other convergent developments (cheaper and more practical cost of solar energy and other renewable/clean fuel, mass produced electric cars, political/economic one-upmanship battles changing the energy dynamics et al) glaringly indicate that oil prices may drop drastically.

What good would your suggested $70 per barrel benchmark be if crude falls to $50.00 per barrel within that budget period? This is nothing but an indictment of how hideously corrupt/profligate and shockingly bereft of foresight/responsibly responsive leadership the GEJ government is. Let us shun political bias and call a spade a spade abeg. We are dealing with atrocious economic mismanagement 101.

bench marks helps a lot ,the current price of oil won't last long but even if it rises it may not rise above 80$. This problem is a global one . But we must determine what the fg has and is doing to cushion the effects and what state govts are doing. The blame is not entirely the fg own. Nigeria is a federal state and state governments can dictate the pace of developments and economic growth of their states irrespective of fg policies. The fg has reduced its spending ,the most important now is for states too drastically reduce their borrowing.

onatisi:
if reports from most apc states is anything to go by it is obvious apc governors know nothing other than borrowing money. I have been studying the causes of the drop in global oil prices and it may be a temporary thing but the future of oil prices is somehow gloomy.

With all honesty, selling our oil is akin to a man selling his birthrights. The industrialized nations require crude not as an energy source alone but for churning out every conceivable finished product. From pharmaceuticals, electronics, fertilizers, and virtually every single product today is dependent on petrochemical products.

We have the market, the means and resources to be self sustainable. Our crude is not supposed to be a worthless forex earner that will end up back in the hands of the west in exchange for goods we ought to be manufacturing.

This business of shale oil is all hogwash. The US stock market is heading for the second worst crash in history in the coming months and the Saudis are pumping more gas into the global and US market to forestall an impending crash of the US economy but it won't work.

Crude prices will remain strong as long as China keeps ramping up their growth rate because most of China's crude export is destined for other non energy use.

MudRaker:
Obasanjo talking rubbish as usual.

The FG is already cutting costs especially in recurrent expenditures, infrastructural cuts will also be made so the budget of 2015 is expected to be lower than that of the past 5 years. It is the state govts with their irresponsible attitude to the commonwealth that will be hard hit.

The governors have already started begging the FG for more.

And a state like Osun with one of the lowest IGR and federal allocations has been operating an increasing deficit budget for 4 years straight with much of the resources used to fund the budget coming from bonds ad loans.

This is the problem.

Hw is he talkin rubbish? Jonathan is clearly a clueless. A president who doesn't hv d knw hw of a country economy status n lack suggestive ideas to salvage it. subjecting our economy to okonjo-iweala is tantamount to entrustin ur fish wit a cat.. Agent of IMF n WB dis doesn't mk her only a wicked bt also anti human development plus corruption largess credit to dis administration. Jonathan shld b study in sch as a worst leader whose path is destructive

jayonpoint:

Hw is he talkin rubbish? Jonathan is clearly a clueless. A president who doesn't hv d knw hw of a country economy status n lack suggestive ideas to salvage it. subjecting our economy to okonjo-iweala is tantamount to entrustin ur fish wit a cat.. Agent of IMF n WB dis doesn't mk her only a wicked bt also anti human development plus corruption largess credit to dis administration. Jonathan shld b study in sch as a worst leader whose path is destructive

Mumu Okonja was the one that rid you off your IMF obligatory payments, got your economy on a sound footing and is steadily trying to diversify your lazy minds of oil.

For your information, Okonja was a serving minister of finance under Obasanjo.

MudRaker:


Mumu Okonja was the one that rid you off your IMF obligatory payments, got your economy on a sound footing and is steadily trying to diversify your lazy minds of oil.

For your information, Okonja was a serving minister of finance under Obasanjo.

It was a dumb thing to pay back those debts, you had a nation with infrastructure deficit paying back close to $18bn at a go, what type of nonsense was that? We should have kept the debts and used the fund we had to restructure the economy, Saudi Arabia just built the second largest refinery with less than that amount, do you know the multiplier effect of such an investment?

hercules07:


It was a dumb thing to pay back those debts, you had a nation with infrastructure deficit paying back close to $18bn at a go, what type of nonsense was that? We should have kept the debts and used the fund we had to restructure the economy, Saudi Arabia just built the second largest refinery with less than that amount, do you know the multiplier effect of such an investment?

Magga we were owing over $30 billion dollars and rising and we needed to borrow and no one will touch us because of our poor debt profile.

Okonja alongside Organizations like OxFam were able to state that most of the monies borrowed to us was done in bad faith alongside corrupt leaders in the past to have us permanently in debth.

jayonpoint:

Hw is he talkin rubbish? Jonathan is clearly a clueless. A president who doesn't hv d knw hw of a country economy status n lack suggestive ideas to salvage it. subjecting our economy to okonjo-iweala is tantamount to entrustin ur fish wit a cat.. Agent of IMF n WB dis doesn't mk her only a wicked bt also anti human development plus corruption largess credit to dis administration. Jonathan shld b study in sch as a worst leader whose path is destructive

Tinubu alongside his APC puppet governors don't see anything wrong in borrowing money to fund over inflated projects that are just meant to repay his campaign contribution.

MudRaker:


With all honesty, selling our oil is akin to a man selling his birthrights. The industrialized nations require crude not as an energy source alone but for churning out every conceivable finished product. From pharmaceuticals, electronics, fertilizers, and virtually every single product today is dependent on petrochemical products.

We have the market, the means and resources to be self sustainable. Our crude is not supposed to be a worthless forex earner that will end up back in the hands of the west in exchange for goods we ought to be manufacturing.

This business of shale oil is all hogwash. The US stock market is heading for the second worst crash in history in the coming months and the Saudis are pumping more gas into the global and US market to forestall an impending crash of the US economy but it won't work.

Crude prices will remain strong as long as China keeps ramping up their growth rate because most of China's crude export is destined for other non energy use.

okay I agree with all u have said. But the question remains that whose responsiblity is it to turn the nation around into an exporting nation and an industrialised one? I am not blaming gej alone for this please don't misunderstand me but I will blame every single president for this starting from gowon. The mess nigeria is in now wasn't created by gej and even obj never did anything concrete to turn around the nations industries he is shouting about. The textile industry in nigeria is virtually dead and obj couldn't and didn't do anything about it. I think it is the responsibility of governments to determine the path they want their countries to follow. State govts too have a huge share of this blame and it is pathetic when the first and only solution that comes to the brains of state governors when confronted with financial iSsues is to borrow or lend. state governments too can initiate industrilization policies for their states