Minister Okonjo-Iweala explains why Nigerian economy is at risk.

The Minister of 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.

“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:

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. 

Source: Legit.ng