Abuja — Minister of State for Finance, Mr Remi Babalola, has declared that the major challenge before the present administration is to de-link public expenditure from oil revenue earnings by introducing an appropriate fiscal rule.

A statement from the ministry said the minister made the declaration on Thursday in an address delivered at the Nigerian-British Chamber of Commerce, London Investment Conference titled "Opportunity in Nigeria".

Mr Babalola observed that "Nigeria's revenue volatility is directly correlated to its dependence on oil proceeds for the bulk of its fiscal revenues, with over 80 percent of all federally collected revenues related to oils. He regretted that the nation's over-dependence on oil and volatility "complicates monetary and exchange rate policies".

"This volatility adversely affects the real growth rate of Nigeria's GDP by inhibiting investment, productivity and reducing public and private investments", he continued.

The minister however, expressed satisfaction that the improved implementation of fiscal and monetary policies has provided a stable macro-environment, "we are set to turbo-change the private sector investment rate and raise the productivity of both public and private investments. The private investment rate will be increased through a combination of macro-economic stabilisation, financial sector deepening, improved governance and more openness to trade".

The minister also stated that henceforth, "all oil revenue windfalls will be saved while shortfalls will be met by expenditure reductions until foreign assets reach adequate level".

He assured that the federal government would invest oil windfall and spend the investments rather than the oil proceeds itself saying, "we cannot afford to waste this second chance".