FG raises concern over Excess Crude Account depletion

The Federal Government on Monday, raised serious concerns over the continued depletion of the Excess Crude Account stressing that the development was capable of causing further inflation. Dr. Ngozi Okonjo-Iweala the Finance Minister/Coordinating Minister for the Economy expressed the fears in Abuja when she appeared before the...
Joint Senate Committee on Finanace and National Planning. Okonjo-Iweala, who was answering questions on the Medium Term Expenditure Framework and Fiscal Strategy Paper sent to the Senate by President Goodluck Jonathan two weeks ago, explained to the joint committee that the essence of the excess crude account was to cushion the effects of harsh economic climate on the citizenry. She, however, lamented that constant pressures which forced her to always share it regularly among the three tiers of government in recent times, was the cause of the current cash crunch being experienced in the country. She said, “I think that the excess crude account was built to be able to cushion us at times like this, when we have some kind of difficulties and I think it played that role to perfection during the crises of 2008, when oil fell to $38 and $40 per barrel, even worse than what we have now. “The IMF actually calculated $6.3bn to be maintained in that account. It (would) help to cushion our exchange rate so if we go and withdraw it abruptly beyond that amount it causes a problem and you know we went down to $2bn last year. “We later built it up to $9bn and there was insistence we must share, it came down to $2 and then we had at least built it back to $5bn. Right now we are at $4.1bn. “If we had built it to a stable cushion, then anything above that we could now use to augment and that the reason why we have not seen…that is why we have to balance out everything. “Nigerians care so much about exchange rate. If you have abrupt changes, that will also affect the psychology of Nigerians, inflation and all that.” The minister who maintained that the nation’s economy at the present time, was reasonably stable compared to other countries, however noted that some actions have to be taken in order to maintain the stability. According to her, the nation’s economy was stable despite the cash flow crisis because of its abundant assets. She said, “Nigeria as a country has quite enough assets and I think anybody inside and outside will agree to that