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FG fails to meet $50bn external reserve target as State Governors battle for $1bn ECA fund

By David Abellegah on January 2, 2013

Finance Minister, Okonjo Iweala

The Federal Government’s earlier plans to build the country’s external reserves to $50bn by December 31, 2012 have failed as the year ended with $44.26bn as its reserve.

The Central Bank of Nigeria reported that the reserves closed $6bn below the year’s $50bn target.

The country’s reserves rose from $32.92bn in 2011 representing a 34 per cent increase in 2012 with a difference of $11.34bn; even with the increase, it could not meet the goals set by the Minister of Finance, Dr. Ngozi Okonjo Iweala for 2012.

The Minister said last year that the Federal Government was going to meet its set target of building the country’s external reserves to $50bn by the end of 2012. At the time of that declaration, the country’s reserve stood at $36.37bn.

Okonjo-Iweala stressed on the need for the country to build its external reserve to $50bn by the end of December 2012 during a meeting with the Organised Private Sector in Lagos.

She said the development would help the country when global economic recession or disaster comes knocking.

Report has indicated that by September 26, the reserve had consistently risen over a 29-month period high above $41.12bn, in the same light the CBN reported that the country’s reserves have grown consistently since August 1, 2012.

Okonjo-Iweala who doubles as the Coordinating Minister of the Economy said the same should apply to the Excess Crude Account, which is expected to rise to $10bn by the end of 2012.

Adding, the minister stressed on the need for Nigeria to have a Sovereign Wealth Fund, which according to her the government was working on, with an initial $1bn disbursed for the Nigerian Sovereign Investment Authority Act.

According to the Federation Account Allocation Committee, the ECA had an account balance of $9.66bn as at December 13, 2012.

Speaking on the ECA, the Accountant-General of the Federation, Mr. Jonah Otunla said, “I think we have fared very well in the ECA. We targeted $10bn at the end of the year. I am happy to tell you that we have $9.66bn in the account. On percentage basis, that is about 97 per cent of our aspiration for the year.”

In the meantime, notwithstanding the ongoing court case between the federal and state governments over the Excess Crude Account, State Governors want $1bn released from the account to them for claimed contractual issues in their respective states.

In support of the demands from the 36 state governors, The Deputy Governor of Sokoto State, Alhaji Mukhtar Shagari, earlier said they need the money to settle many financial problems.

He said, “We have held discussion fully on the issue of releasing at least $1bn from the Excess Crude Account to help the state governments to meet up with their financial responsibilities, because most of the states have contracts that are ongoing.

“They need money so that the contractors will not leave. A decision was taken that this will be looked into.”

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