Lagos — Coordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okojo-Iweala, yesterday, disclosed that the Federal Government had resolved to rebuild Nigeria's depleting Excess Crude Account, ECA, which recently went down to $3.6 billion to $10 billion by the end of this year.
She also disclosed that Nigerian economy remained vulnerable, and buffers needed to be built up, saying: "Foreign reserves have risen slightly from $32.9 billion at the end of 2011 to $37.7 billion (June 2012) but have declined recently on the back of global developments. She said the reserve stands at $36.37 billion, but government's target is to keep the reserves at $50 billion by the end of the year."
Okonjo-Iweala revealed that government was determined to recover subsidy money oil as the Federal Government would punish those who fraudulently defrauded the economy after its investigation is completed.
The Federal Government has discovered N422 billion as fraudulent payment to oil marketers from the N1.7 trillion total subsidy paid on fuel imports in 2011.
Speaking on the state of Nigeria's economy in Lagos, yesterday, at a dialogue with the Nigerian Economic Summit Group, NESG and Organised Private Sector, OPS, she said government would recover the money because it was a major leakage.
Okonjo-Iweala said the five per cent of the country Growth Domestic Product, GDP, being spent on fuel subsidy was not sustainable and the the government was trying to reduce the amount.
While briefing the OPS, on the state of the economy, the minister said a committee on forbearance package for stockbrokers had been set up to advise government on various options of intervention to safeguard the capital market.
In her words: " I am very passionate about the capital market. It is unfortunate that the capital market is yet to rebound, but the Federal Government has limited resources to pump into the market.
"Every sector of the economy is clamouring for one form of intervention or the other. So, government is mindful of all these, and will in the short run intervene in sectors that are in grave need.
"Government is working on reviving the market through forbearance package to market operators; review of taxes, stamp duties, and other charges. It is also concerned with increasing number of listed companies and increasing pension fund investment.
"A committee on the forbearance has been set up and the members include: government agencies, such as Ministry of Finance, DMO, AMCON, SEC, CBN, and the operators in the capital market. The committee was given three weeks deadline to submit its recommendations on the modalities for the forbearance package."
While commenting on Building Economic Buffers, she said, "Thecountry needs a strong buffer against external shocks and one area of providing this is to grow the Excess Crude Account and the Sovereign Wealth Fund (SWF). $1 billion has been earmarked for investment in this fund.
We need to save and we need buffer to safeguard our economy." Okonjo-Iweala noted with dismay the myriad of challenges plaguing the country, ranging from global economic slowdown on oil price volatility, security, corruption, etc, saying that such challenges may have adverse impact on Nigeria's economy if not properly handled.
She announced that the Federal Government has taken some decisive and specific steps to tackle the country's economic problems.
Some of the steps, she revealed, include streamlining of the budget to achieve fiscal consolidation, halting spending on unsustainable manner, lowering of the country's domestic debt payment from N852 billion per annum to N100 billion this year and improving on the country's investment climate.
On the issue of JP Morgan account, she said, " The NNPC owns the account and it is the CBN that operates the account for on behalf of government. So the issue that people should be interested is whether money accrued to Nigeria is being remitted and not necessarily who operates the account."
The minister also said that the Federal Government has embarked on a programme to diversify the economy and grow the country's Gross Domestic Product (GDP) while also creating jobs for the teeming youths.She disclosed that the country's economy grew by 7.63 per cent last year, expressing her happiness that the economy is not contracting going by myriad of problems confronting it.
According to her, "We are happy that the economy is growing. But we are not satisfied with the growth. It is not inclusive. It is not creating jobs. We have over 1.8 million job entrants every year. The quality of that growth is not what we want. The biggest thing to do now is to diversify the economy massively."
On the impact of the global economy on Nigeria, Okonjo-Iweala lamented that trade financing has been thrown off balance while remittances from Nigerians in the Diaspora has come down to 10 per cent of GDP from over 12 per cent two years age. According to the minister: "The supply of trade finance is 40 per cent lower than what it was. That means risks are now higher."
She also announced that Foreign Direct Investments (FDIs) has lowered to $6.5 billion in 2011 from $8.5 billion in 2010, saying that investors are now seeking for less risky environments since there is now a fierce competition for the available funds.
The minister decried the attitude of the banks to lending, especially to the small and medium enterprises and said that a situation where banks lend at over 22 per cent is not healthy for the economy."People should borrow at sustainable rates to grow the economy and open up the system for jobs creation," the minister said.