FG raises the alarm on declining oil revenue, budget implementation

The Federal Government yesterday raised an alarm over declining price of crude oil at the international market, declining revenues, warning that the situation appear to have started straining the national budget, especially financing major development projects in the country. It said that the situation constituted a drawback on achieving a reasonable level of implementation of the capital component of the 2014 budget.

Acting Chairman of the Fiscal Responsibility Commission, Chief Victor Muruako, raised the alarm at the Fiscal Governance Forum organised by the Centre for Social Justice (CSJ) to brainstorm on the uncertainties hanging around the Nigerian economy in the face of declining oil prices.

Muruako represented at the forum by the Head, Directorate of Policy and Standards of the Commission, Mr. Alex Ehikiou, observed that the declining oil prices would affect macro-economic indicators such as exchange rate, employment, trade balance, inflation, public accounts and stock market prices.

He blamed state governments for the depletion of the Excess Crude Account (ECA) through their insistence on sharing what should have been the reserves instead of allowing it to accumulate over a long period and serve as savings for the rainy day.

Muruako explained that the ECA was originally intended to cushion the effects of the volatility of crude oil prices and not for random sharing as the states have reduced it to over the years. The Commission said that in view of the declining price of crude oil at the international market and the dwindling revenue accruing to Nigeria there was need to adopt a more stringent strategy of managing the ECA in order to save the economy from imminent danger.

Muruako attributed the recent world crude market price declines on reduced demand levels from a number of European and Asian economies, substantial growth in domestic crude oil production in the United States as well as the illegal oil bunkering particularly those coming from the Islamic State (ISIS) which is sold at a massive discount of as low as $25 per barrel. Meanwhile, Civil Society Organisations (CSOs) in Nigeria made a reversal in their earlier position on privatisation of refineries and the removal of subsidy on petroleum products in the country.

The coalition of CSOs which met at the Fiscal Governance Forum said they were now convinced that their campaigns against the two policies were rather a product of misinformation or lack of the real facts behind these policies. Lead Director, Centre for Social Justice, Mr. Eze Onyekpere, said that looking at the realities of the economy, it appeared that the civil society and labour goofed when they mobilised the populace against the policies of the Federal Government directed at privatising the refineries and removal of subsidy on petroleum products.

source: newtelegraphonline