According to Chukwuma Soludo, the Central Bank Governor, Nigeria's excess crude account is now depleted.
"NIGERIA'S enormous savings from the oil windfall have been depleted and what is left may not tide the country over any financial turn down should oil price fall below the budget benchmark of $62 per barrel..."
The excess crude fund is used to hold excess monies raised from the sale of Nigeria's oil and petrol products. As crude oil has sold at extremely high prices over the years, excess crude fund has been used by the Nigerian government to 'fund' various programs and it is typically shared between the federal government and state governments.
Considering the current state of the global financial crisis, and the fact that the Central Bank recently intervened in the financial economy with over N1trillion, this revelation is troubling. What happens if the global economy continue to take a nose dive? The depletion of Nigeria's excess crude fund implies that there is no more money available to save the domestic financial sector if that becomes necessary. And, as the price of oil continues to fall, it stands to reason that the country will not be able to quickly replenish the excess crude fund. That will not only affect the possibility of any necessary financial recovery, but it will in turn complicate Nigeria's development which will depend to some extent on the excess crude fund, particularly the power sector.
I am curious to know what Nigeria's Plan B is in the event that the nation needs additional liquidity, because as of right now, the coffers are running on empty.
Hattip to Saheed
1. Nigeria: 'Country Loses N4 Trillion to Financial Crisis'
2. Nigeria: FG to Adjust Oil Benchmark
- Nigeria's Sovereign Wealth Fund
- No Longer King of Crude
- Nigeria's Oil Expiration Date Draws Near
- Did Yar'Adua Flip Flop?
- Can Yar'Adua Accomplish His 'Mission'?