Abuja (AFP) - A cash shortage caused by low oil prices has forced Nigeria to borrow heavily through the early part of 2015, with the government struggling to pay public workers, officials said Wednesday.

Nigerian finance minister pays importers as city petrol queues grow Reuters
"We have serious challenges. Things have been tough since the beginning of the year and they are likely to remain so till the end of the year," said Finance Minister Ngozi Okonjo-Iweala, adding that more than half of this year's borrowing allowance had already been exhausted.

Nigeria, Africa's top economy and largest oil producer, has been hammered by the 50 percent fall in oil prices as crude sales account for more than 70 percent of government revenue.

"As it stands today, most states of the federation have not been able to pay salaries and even the federal government has not paid (April) salary and that is very worrisome," said Imo state Governor Rochas Okorocha.

Okonjo-Iweala said the federal government had a projected borrowing allowance for 2015 of 882 billion naira ($4.4 billion, 4 billion euros).

But 473 billion naira had already been used up to meet recurrent expenditures, including salaries of public employees.

"We have front-loaded the borrowing programme to manage the cash crunch in the economy," the minister told reporters.

According to the Central Bank (CBN), Nigeria currently has $29.6 billion in foreign reserves, but analysts said depleting those funds to offset revenue shortfalls could further undermine global confidence in the country's economy.

The CBN issues letters of credit to all domestic firms that import foreign goods, a measure which serves as a guarantee for international companies that have been reluctant to do business in Nigeria, said Jide Akintunde, editor of the Financial Nigeria magazine.

The CBN is expected to maintain reserves covering six months of imports.

"If we do not have the required level of reserves, imports could start to freeze up," Akintunde told AFP.

For Okonjo-Iweala, accelerated borrowing is the easiest strategy to manage the current shortfalls, Akintude said, although with a new government set to take power at the end month, the revenue crunch will soon be someone else's problem.

President-elect Muhammadu Buhari will be sworn in on May 29 and is not expected to retain any of the key ministers appointed by outgoing president Goodluck Jonathan.

Government critics have alleged that Nigeria's revenue crisis was compounded by excessive and wasteful political spending through last month's general elections.

Leaders of Buhari's All Progressives Congress (APC) party warned that the incoming administration will be confronted with serious economic headwinds after taking office.

But Akintunde said the news is not all bad for Buhari.

The current benchmark oil price is $54 per barrel and with crude selling above $60 this week, Nigeria should have sufficient revenue to meet costs and invest in public projects, he said.

"What the Buhari government will have to do is show a lot of discipline," Akintude added, criticising the outgoing government for a failure to honour a series of austerity promises and pledges to tackle graft.

Okonjo-Iweala has defended the government's performance, noting the economy was projected to grow at 4.8 percent this year and Nigeria was therefore "doing much better than many other oil producing countries," similarly hit by the collapse in crude prices.

But, as Jonathan leaves office with the government's finances in tatters, observers will likely note his administration's inability to save for a rainy day.

Nigeria has previously set its benchmark crude price between $75 and $80, and was supposed to deposit excess revenue in a savings account.

But even when crude was selling above $100 last year Jonathan's administration struggled to build savings, partly because the excess crude account has been repeatedly raided by powerful political actors.

But analysts note that the APC is partly to blame for the failure to pay salaries at the state level, with pro-Buhari governors suspected of spending state funds to support his presidential campaign.

http://news.yahoo.com/nigeria-borrows-pay-salaries-cash-crunch-worsening-102704347.html

The zoo (Nigeria) is crumbling. The zoo is wobbling. God bless biafra

Why can't these woman do herself the honour of resigning.
It's quite obvious she has lost it.

If you're here to read comments just like me, click like

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Ftc

!

I'm definitely moving back to Nigeria. Things are getting better.

This is where we have found ourselves in the economic policies of Ngozi Okonjo iweala.
Corruption and impunity are the best words to qualify Jonathans administration.
African biggest economy is borrowing to pay salaries while PDP n
Jonathan spent over N2tr only on election campaign and about 5 folds of this has been wasted over the years without a significant improvement in the lives of an average man.
I dont know why a fraction of Nigerians are refusing even in the face of this grave corruption to admit that voting out PDP has being the best thing ever to happen at this time and age in Nigerian history.

Legalise weed and start mass cultivation and exportation. Naija has good weed. Strong wella. If you doubt, try Kwale and Benue species.

Seriously?

There was a protest today along Lobito Crescent where the protesters where demanding Diezani be brought to book for her corruption.

Makes me wonder.

They still don't understand that they need to slash the wages of public sector workers?

I just wonder what this country would turned to, if we were to still waste another four years under the clueless and corrupt government

All those money you people were sharing during election. Chai.. Chai... there is God o

Chai...7th oil producer in the world.

Our leaders May God treat ur life the way u are treating us in this country, Amen.

So? Why should this be on the front page three times?

Pdp has distroyed this country.I thought Okonjo iweala told us Nigeria is not broke..How I wish tomorrow is May 29...

On Yahoo news homepage

Our dirty linen is now being washed in the town square, what a pity....

What amazes me about the whole sorry Okonjo Iweala story is that under OBJ she was a SAVER/ GATHERER but under Jona she became a SQUANDERER, what happened to her dignity?

Dis country needs serious deliverance

Buhari has some huge task waiting him. Couple with the enormous expectations of my fellow brothers, I pity the 72years old Daura Man. Eyah!!!




FTP Chilling

ok

Yet we are maintaining 11 presidential Jets and we have Ministers, junior ministers (minister of state) and in some cases Junior junior ministers (Minister of state II eg Obanikoro )... Wasting resources for nothing..

smh

I believe in change,there will be a new Nigeria comes june,baba gonna change the situation of this country.If you believe in "change" lemme hear you say baba lole shey
Keep calm and vote www.nairaland.com/twaci for Miss NL.
Remain blessed

They better complete my allawee before the money finishes......


I know people will come and blame GEJ and Iweala, leaving out the satanic legislatures who make laws to only enrich themselves,and the stupid Oil moguls who is determined in crumbling Nigeria.


The only way to save Nigeria is Revolution..if you think APC will do a thing to improve on the decayed economy you are dreaming on a water bed...APC is made up of same PDP who ship-
wrecked the country ......

We need a total clean up in Nigeria

And billions were wasted all in the name of campaign!

Wasteful government yet they love that illusional top-economy-in-Africa title

The bogus take home of ministers, senators etc should be slashed. That will atleast potray them as responsible