Federal Republic of Nigeria Minister of Finance, Dr. Ngozi Okonjo-Iweala, has addressed the Nigerian press saying that the level of domestic debt needs to be curbed. She is a former official of the World Bank., a photo by Pan-African News Wire File Photos on Flickr.
Okonjo-Iweala worried over oil price fall
November 02, 2012
Nigeria is concerned that oil and gas prices could fall as more countries uncover reserves, Finance Minister, Dr Ngozi Okonjo-Iweala, has said.
“We are worried. We are concerned, because obviously so many countries are discovering oil and gas so the supply will be increasing over the next few years and, therefore, we need to plan accordingly to make sure we have the necessary buffers in our own economy,” Okonjo-Iweala told reporters during a visit to London.
Reuters said she spoke in the context of a domestic budget debate, which has seen parliament press for the government to count on a higher oil price and save less of its current high revenues from the sector.
Oil makes up about 80 per cent of government’s revenues. The draft 2013 budget assumes a global oil price of $75 a barrel, up from $72 a barrel this year, but parliament has pushed to raise the benchmark to as much as $80 per barrel.
Money earned from oil over the benchmark price is deposited into a savings mechanism called the Excess Crude Account (ECA). Any increase in the benchmark price will, therefore, reduce savings and make Nigeria less resistant to oil price shocks.
“In terms of benchmark price, we strongly believe that $75 is the right benchmark for us, it will help us to build buffers,” Okonjo-Iweala said.