Rising crude oil price good for Nigeria – Finance Minister
By Abdullahi Mohammed, Abuja
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said the rising price of crude oil is a good omen for Nigeria.
The minister said this while addressing State House correspondents on the state of the economy under President Muhammadu Buhari Thursday in Abuja. She said gaining more revenue form the sale of crude would yield more revenue for government as well as reduce the country’s rate of borrowing.“The more revenue we realize out of the budget, the less we borrow.
As we see the oil price rising and provides us more revenue, it provides us some reliefs. We will be able to reduce our borrowing so, it is a positive thing for us,” she said.
She also assured Nigerians that government has already made provision for COVID-19 vaccines in the 2021 budget.“We have a position in the 2021 budget for immunization. We are already releasing money to the health authority to start operation in the first batch of vaccines that is going to arrive the country in one week.
“But what we have in the budget is not enough, so we are working with the health authorities to provide a plan that will be taken to the President for approval and to be taken to the National Assembly as a supplementary budget specifically for COVID -19 vaccination,” she said.The minister said there would be a supplementary budget for the 2021 national budget.
“There will be a supplementary budget, the first one will be in March relating the COVID-19 pandemic but we will also have a mid-year review like we did last year of the budget and if at the time we do the review and there is a need to go back to do any amendment for supplementary budget, at that time we will take that decision, if not, we will just report the review,” she said.
Commenting on the support facility Nigeria got form the World Bank and other International financial institutions, the minister said: “We closed 2020 by being able to realize $3.4billion from IMF, $600million from AfDB. We were not able to conclude our negotiation with the World Bank and also with the Islamic Development Bank. Even with Islamic Development Bank, we signed for the last tranches but for the World Bank, we started negotiation with the World Bank with the list of about 10 requirements that we needed to address and we had addressed those 10 requirements but, the World Bank position is that we have not sufficiently addressed the requirements relating to having a single exchange rate.
“Their view is that despite the fact that we have adjusted the official exchange rate from N305 to N360 and we further on moved to I&E or the Nafex window, and as we speak, federal government inflows and outflows are monetized at the Nafex window rate. So, we feel we have met that requirement by the World Bank is saying that we have to close that gap between the black market and Nafex window.
“Our point is that is not what you do over night. It’s not that you wake up and make a pronouncement and that happens. It’s something that you have to do over time taking several measures and working systematically for it to happen.“So, we are still pushing our view with the World Bank and we hope to convince them that this also requirement has been met and that they should now give us approval to go ahead and release the $1.5billion that we have been discussing with the World Bank. But having said that, the World Bank during 2020 has also given us approval for a number of facilities. One of them is the $500million for metering system for the Distribution network, $750 million for the power sector recovery programme and several other facilities that we have on table with the World Bank that were approved during the course of the year 2020.”While justifying Nigeria’s rate of borrowing, the minister said the country’s proportion of borrowing is not misplaced because its to develop infrastructure not to be left behind.
“There is a lot sensitivity in Nigeria about the level of borrowing by the government and it is not misplaced. And I said earlier that the level of borrowing is not unreasonable, it is not high. The problem we have is that of revenue.“So, what we need to do is to increase revenue to be able to enhance our debt to GDP obligation capacity. If we say we will not borrow and therefore not build rials and major infrastructure until our revenue rises enough, then, we will regress as a country. We will be left behind; we won’t be able to improve our business environment and our economy will not grow.
“So, it is a decision that every government has to take. Our assessment is that we need to borrow to build our major infrastructure. We just need to make sure that when we borrow, we are applying the borrowing to specific major infrastructure that will enhance the business environment in this country.“Again, we all have to work not just the federal government but state governments to increase our revenue to enhance our debt service obligations. We also have to make sure that when we are choosing the projects, we are choosing carefully the ones that will enhance business environment so that more revenue yields come into the treasuries of the country,” she said.She said Nigeria’s total borrowing as of December 31, 2020, stood at N32.9 trillion, representing 21.6 percent of the GDP.
She said as of 2019, the debt to GDP ratio was 19.2 percent, stressing that only two percent was added.