Governor of the Nigerian Central Bank has warned that the country’s financial reserves may not be enough to carry the country through any financial upheaval if oil prices further drop from the $62 a barrel scale.
The governor claimed that, much of the savings in the excess crude account has been spent and what is left will not be enough to make any significant impact on the budget if the price of oil falls below the budget scale.
Reports from the Money Market Association of Nigeria claim that N1.723 trillion had been shared by the three arms of government from the excess crude oil account. N592 billion was shared in May while another N569.79 billion and N562 billion respectively was shared in June and July.
The Central Bank governor further added that the federation account committee agreed that N1 trillion be set as the base for the savings and whatever was earned as excess revenue in any particular year, above the one trillion mark, 80 per cent of it should be shared among the three arms of government while 20 per cent would be saved.
‘From what was saved, the three tiers of government agreed that the sum of $5.6 billion be spent on power, stressing that with the drop in the production level which had resulted in the drop of crude export as a result of the activities of the militants in the Niger Delta, part of the savings had been used to supplement the revenue allocation to the three tiers of government in months when available revenue fell short of the budget provision.
However, the leader of the Nigerian delegation to the IMF/World Bank meeting has revealed that the current financial and economic crisis posed some financial challenges to Nigeria as the prices of oil are on the downward trend.