VENTURES AFRICA-Nigeria has doubled savings in its Excess Crude Account(ECA), now totalling $9 billion, amidst efforts to improve fiscal discipline and economic stability in the country.
Speaking at the Nigerian Economic Summit in Abuja yesterday, Finance Minister Ngozi Okonjo-Iweala revealed that funds in the ECA have grown to at least $9 billion, up from last year’s savings figure of $4 billion.
“We have about $9 billion in the excess crude account. Last year it was $4 billion, so it’s more than doubled,” Okonjo-Iweala said.
The improved savings of the country – which is Africa’s largest oil producer – can be attributed to strict fiscal management, according to the minister, who added that economic disciplinary measures introduced by the government are responsible for foreign exchange reserves finally starting to climb in Nigeria.
“The fact that (forex) reserves are climbing now is not a miracle. It happened because of proper fiscal management,” Okonjo-Iweala told attendees at the Summit.
The minister went on to argue that before true economic prosperity can be achieved, including a rise in the number of jobs available to the population, government must address fiscal and macro-economic challenges in order to provide a structure for growth.
“Before you can even look at the centres of the economy and trying to change them and create jobs, you must have macro-economic stability…We have introduced a measure of fiscal discipline,” the minister explained.
Nigeria’s Excess Crude Account collects savings with a view to providing an economic buffer in the case of and financial crisis affecting the country, and stores funds for the benefit of future generations.
With Nigeria producing in excess of 2 million barrels of oil per day, oil accounts for 95 percent of the government’s revenue, and any earnings from oil that are made over the benchmark price are held in the ECA.
However, the government has come under criticism for putting aside so much revenue in the form of ECA savings, with some critics arguing the government should be spending the money on improving infrastructure across the country.