Nigerians should brace for tougher economic times ahead, the Minister of Finance, Ngozi Okonjo-Iweala, has said as crude oil prices slipped to a four year low on Wednesday.
New York Mercantile Exchange (NYMEX) December WTI oil futures sold at $75.20 per barrel on Wednesday, down $1.98, from $74.96 per barrel the previous day, the lowest level for a most-active contract since September 2010.
Though the price of sweet crude, the blend of oil export from Nigeria, rose marginally at the close of trading on Wednesday to $76.96 per barrel, it has already crashed below the $79 per barrel benchmark approved in the 2014 Appropriation Act, concerns are mounting that tough times are indeed ahead.
At the end of the Federation Accounts Allocation Committee (FAAC) meeting for September, Federal, States and Local Governments were only able to go home with N603.5 billion allocation after they resolved to borrow about $2.76 billion from the Excess Crude Revenue Account to augment shortfall in revenue generated during the period.
The Federal Government had attributed the declining revenues to the fall in prices at the international oil market.
After drawing from the ECA, Minister of State for Finance, Bashir Yuguda, said the balance in the account had dropped further from $4.1 billion to about $1.34 billion at the moment.
But Mrs. Okonjo-Iweala said in Lagos on Tuesday that the economic indicators show there are tougher times ahead.
Though she said the country’s External Reserves rose from $36.6billion at the end of June to $39.48billion by October 16, and the balance in the Sovereign Wealth Fund at $1.55billion, accruals from oil exports have been poor.
According to her, Nigeria would begin to feel the impact of the dropping oil prices at the international oil market, which commenced since the first half of the year.
“The country must brace up for tougher times ahead”, she said. “We need to review our expenditures and build economic buffers through budgets that would be based on modest oil prices.”
She underlined the importance of a sound macro-economic management to Nigeria at this time, particularly the need to plug all revenue leakages.
“We have not yet seen the impact of the falling oil prices in Nigeria. It will start this month. We have to drive the non-oil revenue base to be able to weather the storm that is coming,” the Minister said.
The minister said the fall in the prices of export commodities such as gold, iron ore and agricultural produce such as cocoa, cotton and coffee was bound to affect most African economies, which relied on commodity export for the sustenance of their economies.