Economy Under Threat as Excess Crude Account Shrinks – Okonjo-Iweala

Finance and the Supervising Minister of the
Economy, Mrs. Ngozi Okonjo-Iweala stated on
January 22, 2014, Wednesday that Nigeria's
economy is under threat, following the
continuous decline in its Excess Crude
Account.
Mrs. Okonjo-Iweala said this in an interview at the
World Economic Forum in Davos, Switzerland.
The Minister noted that said the depletion of the
Excess Crude Account to about $2.5 billion, has
made the country more vulnerable than it was in
the past and put the economy of the country at
great risk.
"We have tried to set the country's main
parameters in a very modest way. We have made
our budget at a very reasonable benchmark price
for oil.
"This is to shield us and to ensure we are not
subjected to any volatility there may be in the oil
markets," she added.
Mrs. Okonjo-Iweala predicted growth of Nigerian
economy at the level of 6.75 % in the year 2014,
reminded that the previous year brought the
growth of 6.5 %.
However, she noted that increased growth has also
fuelled rising inequality in the country over the
years:
"In Nigeria we are growing very fast, but that
growth has come with increasing inequality and
lack of inclusion of certain segments of the
population," she said.
The Excess Crude Account has been depleted from
$8.65 billion at the end of 2012 to $2.5 billion
currently, while Nigeria's external reserves dropped
11 per cent from last year's peak of $48.85 billion,
recorded in May.
The Monetary Policy Committee of the Central Bank
of Nigeria (CBN) had on January 21, 2014, Tuesday,
after its bi-monthly meeting, expressed concerns
over the depleting fund, saying that the absence of
such fiscal buffers "increases our reliance on
portfolio flows thus, constituting the principal risk
to exchange rate stability, especially with
uncertainties around capital flows and oil price."
Therefore, the CBN urged the fiscal authorities to
block revenue leakages and rebuild fiscal savings
needed to sustain confidence and preserve the
value of the naira.

Sent From David Aniemeka