FG Turns to ECA to Forestall Fiscal Crisis

16 May 2012

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Dr. Ngozi Okonjo-Iweala

•FAAC meeting fails to hold, moved by two days

By Kunle Aderinokun and James Emejo

The Federal Government is building up the excess crude account (ECA) to cushion the effect of shortfalls in revenue accruing from sale of crude oil owing mainly to theft and illegal bunkering in the Niger Delta.

The Coordinating Minister of the Economy and Finance Minister, Dr. Ngozi Okonjo-Iweala, told THISDAY Tuesday that Nigeria has the ability to meet her obligations and payments as things stand today.

Even though Okonjo-Iweala admitted that the Federal Government might have recorded shortfalls in “one or two months, which is not out of place in the business of government", she argued that the government was managing the situation by building up ECA which stood at about $4.3 billion as at Tuesdat.

“The shortfall is not tantamount to fiscal crisis. And the shortfall has happened for the past month. The Federal Government is working to make sure that these activities (theft and illegal bunkering of crude oil) are curtailed. So you cannot, because there has been an issue for a month or two, talk about fiscal crisis. There is no fiscal crisis,” she said.

THISDAY had reported yesterday that with the massive theft of crude oil going on in the Niger Delta, Nigeria was on the verge of facing a fiscal crisis if the trend continued.

But assuring Nigerians that the country’s finances are solid, she ruled out the possibility of a fiscal crisis.

“The country is not in any fiscal crisis. We have the ability to meet our obligations and our payments. You know, be it for salaries, debt servicing and for all the things that we are supposed to do. It is true that we have to be careful to balance things because there are some challenges which have to contend with.

“There have been a lot of questions about government finances. But I want to reassure Nigerians that government finances are solid. As I said before, we have to balance and take cognisance of the fact that we need to build up our buffers. We are focusing on trying to build up the excess crude account so that we can have stronger buffers. We are focusing on making sure that the financial operations are conducted on time,” she said.

She, however, expressed the need to be careful in handling the issue of theft and illegal bunkering of crude oil.
“It is true we have got to be a bit careful because the issue of bunkering and all that have an impact on revenues, but that does not mean there is any crisis,” she added.

Meanwhile, the monthly meeting of the Federation Accounts Allocation Committee (FAAC) originally scheduled for Monday, May 14 and yesterday to distribute revenue to the three tiers of government for the month of April has been put-off.

THISDAY checks revealed that the FAAC meeting would now hold on Thursday and Friday this week.

Although no official reason was given for the postponement, THISDAY gathered that the Minister of State, Yerima Ngama, who is the chairman of FAAC, was having a closed door meeting with the state finance commissioners and other relevant stakeholders to tighten loose ends.

While there were insinuations in some quarters that the issue of revenue shortfall might have caused the postponement,  Chairman, Commissioners of Finance, Mr. Eze Echesi, told THISDAY that he was not aware that there had been revenue shortfall.

However, there has been a long-drawn disagreement between the states and the Federal Government on the sustained monthly subsidy deductions from the federation account by the Nigerian National Petroleum Corporation (NNPC) with the states calling for a stoppage.
The argument over subsidy deduction had only intensified lately following the state of revenue and had also forced the committee to emphasise on diversification of the economy from oil.

But Okonjo-Iweala told THISDAY that delay in FAAC allocations to was not an issue “because we were simply waiting for money to be disbursed by the NNPC”.

“Sometimes when it comes in a bit late, we augment from the resources in the excess crude account and pay back later. And that has been working well,” she explained.

She explained further: “The Federal Government is not withholding any money… everything is very transparent. There is a technical meeting that holds before FAAC, where all the numbers are put on the table for everybody to look at. And when the resources do not meet up with the amount projected for the month, it is discussed as to what are the reasons. You know, once NNPC sells, the money has to come in.”

Tags: Featured, Nigeria, News, FAAC, Crude oil, Niger Delta, ECA

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