The Nation Newspaper

Tag: ECA

  • CBN warns against further depletion of ECA

    CBN warns against further depletion of ECA

    • MPR/CRR stays at 12%

    • Inflation target of 6-9% for 2014

     

    The Central Bank of Nigeria’s (CBN) Monetary Polic Committee (MPC) has warned against depleting the Excess Crude Account (ECA). It urged the Fiscal Authority to step up efforts at building buffers.

    Addressing journalists at the end of this year’s MPC meeting in Abuja, CBN Governor, Sanusi Lamido Sanusi, said the erosion of the fiscal buffers through the depletion of the ECA has further exposed the economy to vulnerabilities, while the fall in oil revenue has left capital inflows as the only source of external reserves accretion.

    He called on the fiscal authorities to rebuild buffers in the excess crude account, saying this could be done by blocking fiscal leakages in the oil sector and increasing oil revenues.

    “Clearly, the major risk on the fiscal side at present is not one of escalation of spending, but loss of revenue from oil exports,” Sanusi warned.

    He said the MPC resolved to “keep the Monetary Policy Rate (MPR) at 12 per cent +/- 2 per cent; private sector Cash Reserve Ratio (CRR) at 12 per cent; public sector CRR at 50 per cent and liquidity ratio at 30 per cent.”

    He said the Committee formally adopted an inflation target of 6-9 per cent in 2014, reaffirming its commitment to move Nigeria firmly into being a low-inflation environment, noting that, while Federal Government spending overall this year has not been significantly higher than that of last year, oil revenues have continued to decline in spite of the relative stability in oil price and output, when compared with preceding years.

    As a result, Excess Crude savings have fallen from about $11.5 billion at year-end of 2012, to less than $5 billion as at November 14, this year.

    “External Reserves have remained in excess of $45billion only because of a massive inflow in portfolio funds. The implication of this is that financial markets are extremely fragile and susceptible to external shocks,” Sanusi said.

    According to the CBN governor, the Federal Government debt “has also risen phenomenally along with its deposits at the deposit money banks, making the government a net creditor to the system. This underscores the urgent need for immediate implementation of the Treasury Single Account. The continued delay in returning government accounts to the central bank is adding to the huge cost of government debt due to poor cash flow management.”

    MPC noted that the increase in external reserves to $45.37 billion as at November 15, 2013, represented an increase of $1.26 billion or 2.85 per cent above the level of $44.11 billion at end- September 2013.

    External reserves, he disclosed, increased by $0.95 billion or 2.14 per cent on a year- on-year basis over the $44.47 billion at end-November 2012. MPC, he said was disappointed at the low rate of reserve accretion in spite of strong oil prices which is a result of the absence of fiscal savings.

    The MPC also noted that the Asset Management Corporation of Nigeria (AMCON) is expected to reduce its debt by N1 trillion by next month. He said the CBN has directed that AMCON redeem its bonds for cancellation by exchanging them for Federal Government of Nigeria (FGN) Treasury Bills on its books.

    Consequently, the only impact of the repayment Sanusi said is that the Balance Sheet of AMCON (and the contingent liability on the FGN from its guarantee of AMCON Bonds) will shrink by N1 trillion.

    This, he noted is positive for the economy and the credit rating of the FGN and the banking industry. Its impact on the markets he explained “will be minimal given that only AMCON’s Balance Sheet is affected significantly and AMCON is not a player in these markets.”

    Also the committee has expressed concern at the massive depletion of the Excess Crude Account (ECA) and called on the Fiscal Authorities to rebuild buffers in the excess crude account.

  • How $5b ECA cash was spent, by Okonjo-Iweala

    How $5b ECA cash was spent, by Okonjo-Iweala

    Minister of Finance Dr. Ngozi Okonjo-Iweala explained yesterday how the Federal Government spent the $5billion excess crude cash declared “missing” by the Nigerian Governors’ Forum (NGF).

    In a statement, the ministry described as false, allegations by Rivers State Governor Rotimi Amaechi that $5 billion is missing from the Excess Crude Account (ECA).

    “Governor Amaechi cannot credibly deny knowledge of the status of the ECA. He has been closely involved and actively participated in making requests to the Presidency for the ECA to be shared for the purpose of augmenting the regular allocations from the Federation Account whenever there is a shortfall.”

    The statement added that the $5 billion in the ECA, which Governor Amaechi referred to, “has been shared to the three tiers of government to make up for the revenue shortfalls during the Federation Accounts Allocation Committee process.”

    The ministry said it “also went for SURE-P payments and the balance for subsidy payments to oil marketers”.

    The minister said Rivers State received N56.2 billion, the second highest share among the states, for January to September 2013 from the ECA.

    This amount, the ministry added, “includes N43 billion for shortfalls plus N12 billion released for SURE-P.”

    Okonjo-Iweala and her team added that “earlier this month (November 2013) Rivers State along with other states, benefitted from the sharing of $1 billion from the ECA to augment the allocations.”

    It then described as curious, claims by Governor Amaechi denying knowledge of the whereabouts of the N56.2 billion which Rivers State has received from the ECA this year.

    With regards to claims that Okonjo-Iweala has refused to sign the African Development Bank (ADB) loan for a water project in Port Harcourt. Again, the ministry denied the allegation as wrong.

    The loan in question the ministry said “has been appraised but it is yet to be negotiated. Before the minister can sign it, it has to go through the negotiation process and be considered and cleared by both the Board of the African Development Bank and the Federal Executive Council. So the issue of the minister refusing to sign it simply does not arise.”

  • Amaechi raises the alarm over ‘missing $5billion Excess Crude fund’

    Amaechi raises the alarm over ‘missing $5billion Excess Crude fund’

    • Governors Forum demands transparency in NNPC finances

    •Jonathan shuns meeting with state chief executives

    • Okonjo-Iweala accused of stopping $200m ADB loan for Rivers

    Who and what could have made $5billion disappear from the nation’s Excess Crude Account (ECA)?

    This was the challenge the Chairman, Nigeria Governors’ Forum (NGF), Rotimi Amaechi, threw at the anti-graft agencies yesterday in Sokoto.

    He spoke while declaring the second annual retreat of the state chief executives open.

    The River State governor said the Excess Crude Account stood at $9billion last January only to shrink to only $4billion today.

    “That account belongs to Federal, States and Local Governments. Today it is $4billion. We don’t know who took $5billion,” he said.

    President Goodluck Jonathan, who was billed to deliver the key note address at the retreat, was absent.

    He did not send any representative.

    Also absent were members of the Jang -led faction of the forum, which enjoys the backing of the Presidency.

    Amaechi said it was convenient for the anti-graft agencies to look the other way now on the matter because of the apparent involvement of the Federal Government whereas the same agencies, according to him, would have waded in if any of the state or local governments were involved in a similar financial irregularity.

    He said the agencies are being used for political vendetta against opponents of the federal authorities.

    His words: “Today the EFCC is either in Jigawa or in Kano because they disagree with the President. What about NNPC? What about the Ministry of Niger Delta and the Ministry of Works?

    “The whole governors put together we receive 26 per cent from the revenue of the Federation. The Federal Government gets 52 per cent. And with that 52 per cent, nobody goes after the Federal Government to say ‘how did you spend it’?

    “And then you go after those who got 26 per cent. Even if you recover all the 26 per cent, what have you benefitted from it as against those who have stolen 52 per cent?”

    He asked the followership to begin to demand accountability from the leadership otherwise entrenching democracy in the country would remain a mirage.

    Lamenting the lack of effective leadership in the country, he said: “”The only thing that fascinates me is the definition of legacy projects. Because if I were to be the President, I would want to leave a legacy of free and fair elections.

    “But nobody in government or outside government sees that as a legacy. Those are the intangibles that can make for good governance. Nobody believes that governance is not the structures that have broken down.

    “Nobody knows that Nigeria is as chaotic as it is because there are no organizations; we have no rules. What I mean is not laws by the National Assembly – the standard by which you measure the expectation of the people you govern.

    “There is a friend of mine who went to see the Inspector General of Police and then he got there and saw a DIG and then the DIG said ‘you are also here, are you not Governor Amaechi’s friend who is against our government?’

    “This means from day one, the police is on the other side. And the police is the Nigeria police. It is not PDP police.”

    He also spoke on his ordeals in the hands of the Federal Government arising from his disagreement with the Presidency.

    He accused the Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo Iweala of refusing to approve a $200million loan meant to provide water for the people of Rivers State because of his disagreement with the President.

    He said that other agents/agencies of the Federal Government have stalled development in his state for the same reason.

    The governor said: “The African Development Bank (ADB) met with the Rivers State Government. We agreed on the loan and they signed off every document. All the requirements have been met to give us $200million as loan for water in River State.

    “We travelled and concluded every arrangement but the Minister of Finance, who by international standard is recognised in the world, has refused to sign off for us to provide water for Rivers people.

    “Meanwhile, I ,the Governor, I drink bottled water paid for by Rivers people and then she has refused to sign off for the money to be released so that we can give our people water because Governor Amaechi is against the President.

    “So it is like two women quarrelling and keeping malice with you. So they are keeping malice with me now and my people should die because I disagreed with the President.”

    Amaechi said Nigeria is facing lot of challenges, which can only be addressed if the leaders make conscious efforts to do the right thing.

    The Catholic Archbishop of Sokoto, Dr Matthew Kukah, in his presentation entitled: “Good governance and the imperative for managing and leaving a sustainable legacy” charged the governors to leave legacies for which they will be remembered by the people.

    He decried a situation where governors receive awards from everywhere without concrete development in their states.

    On the role of education in good governance, the clergyman said the nation cannot move forward without ensuring that every child is given quality education.

    Kuka said: “It is impossible for us to move in any direction at all without seriously, honestly and sincerely committing ourselves to the fact that we have a commitment that no single child in Nigeria be left behind in terms of education.

    “I’m hearing from the Ministry of Education, all kinds of agencies, the Universal Basic Education that there are hundreds of billions of Naira locked up.

    “States cannot access the money simply because they have not been able to come up with counterpart funding.

    “The truth is that we have not made up our mind about education because I don’t know whether we are not running contrary by having a school where the children attending the Almajiri schools are already stigmatised.

    “How many really serious members of the Nigerian elite will send their children to these schools? And am I going to graduate one day with a PhD from Almajiri school and I want to be a professor in this country?

    Speaker of the House of Representatives, Aminu Waziri Tambuwal, who spoke on the “Role of states in deepening democracy and good governance in Nigeria” lamented that the military terminated the country’s parliamentary system of government that was suitable for Nigeria and replaced it with the presidential system which in essence is a unitary system of government.

    Tambuwal faulted the unwieldy powers vested on the Federal Government by the Constitution which “has also made it possible for the Federal Government to control the police making it almost impossible for states to have a significant role to play in crime prevention and law enforcement.

    “When you see the way things are going in Nigeria, you come to the conclusion that it is not possible for us to practise presidential system of government the way it is done in the United States from where we copied our federation.

    “Another manifestation of the unitary system is the concentration of resource allocation on the federal government leaving states as if they were beggars.”

    He added that the State Assemblies have failed the people by not being able to exercise due oversight on the state executives.

    In a communiqué at the end of the retreat, the NGF insisted on transparency in the operations of the Nigeria National Petroleum Corporation (NNPC) and urged Nigerians to stop being docile in the face of monumental impunity in the country.

    The governors stressed the need for “intangible aspects of good governance anchored on a framework of ethics, values and political morality to drive development and leave a durable legacy of democratic governance.”