THUR, FEB 20 2020-theG&BJournal- Latest figure provided by BudgIT showed a huge drop in Nigeria’s excess crude account (ECA), the oil savings account, which holds the country’s dollar reserves from sales of crude above the assumed benchmark price.
The balance dropped from US$325 million in October 2019 to just US$70 million by February 2020. The drop has raised concerns that the huge unexplained draw down will add to the pressure the economy is currently experiencing.
Concerns on the economy forced the International Monetary Fund (IMF) Tuesday to revise Nigeria’s growth forecast down to 2 percent. The IMF assessed the pace of economic recovery which it says ‘’remains slow, as declining real incomes and weak investment continue to weigh on economic activity.’’
The management of the ECA has come under constant criticisms in recent times for its opaqueness. In 2019, the IMF raised concerns on the manner of draw down noting that the ECA was set up to save resources when oil prices are high and be drawn on when oil prices are low.
The Federal Government maintains the US$60 benchmark for the 2020 budget but crude prices has since dropped below US$60 and the uncertainty around the coronavirus epidemic has brought recent rebound to a halt. Brent Crude traded at $59.12 a barrel Tuesday. The lower oil price also points to critics’ concerns on the manner in which the ECA is being managed.
The Muhammadu Buhari administration drew consternation from the public in 2019 when it withdrew $1 billion from the account. The Presidency subsequently explained that the money was spent for the purchase of military hardware for the Nigerian army and Navy
US$107 billion has been withdrawn from the account between Jan 2004 to April 2018.
The ECA was established by ex-President Olusegun Obasanjo in 2004 to promote savings on every dollar above the annual oil benchmark. Obasanjo built up the account to $20 billion at the end of his tenure in 2007.
|twitter:@theGBJournal|email: info@govandbusinessjournal.com.ng|
