Nigerian economy is facing serious cash crunch and may remain in comatose till the end of the year except drastic action is taken to reverse the trend.
Already, the ripple effect of the economic down-turn bedeviling the country has resulted in non release of capital budget so far this year.
The severe economic challenge confronting the country has been attributed to the about 50 percent decline in oil revenues, which has left the federal government with the option of keeping the economy stable by running through series of measures.
Admitting this sad economic development Nigeria is enmeshed; Minister of finance and coordinating minister for the economy, Dr. Ngozi Okonjo-Iweala said this in Abuja yesterday: “As you know, I have been honest with you since the current economic problems started.
“I would like to repeat: we have serious challenges, things have been tough since the beginning of the year and they are likely to remain so till the end of the year.
“We have serious challenges but we also have strengths and if we do the right things we can keep a steady course and emerge out of the current situation.”
Going on memory lane, Okonjo-Iweala pointed out that “as a result of the 50 percent decline in oil revenues, the country has faced a difficult cash crunch and the Federal Government has focused on keeping the economy stable and the government running through a series of measures”.
One of the measures according to her is that “we have front-loaded the borrowing programme to manage the cash crunch in the economy”.
Out of the N882 billon budgetary provision for borrowing, the government has borrowed N473 billion to meet up with recurrent expenditure, including salaries and overheads.
Okonjo-Iweala explained: “Traditionally the first part of the year witnesses low revenue because tax receipts come in from the middle of the year. This has compounded the challenges caused by the steep drop in revenues due to the oil price fall.
“As a consequence of the revenue challenges, there has been no capital budget release so far this year.”
She was optimistic that in spite of this challenge, government has managed to keep the economy stable to the point that the Nigerian economy which is projected to grow by 4.8 percent this year is according to respected analysts, doing much better than many other oil producing countries.
“One positive feature despite the clear challenges is the fact that food prices, though inching up are still quite stable. Also inflation is still in single digits. This has helped to reduce some of the pressure that Nigerians are going through.
“We also have the advantage that we are an asset rich country and that is a definite strength.
“It is a challenging time and requires daily, weekly and monthly management to keep the country going and that’s what we have been doing,” Okonjo-Iweala further stated.
Giving an analysis of the 2015 Appropriation Bill, the Minister of finance and coordinating minister for the economy said “The Senate on Tuesday, 28th April 2015, passed the 2015 Budget following the passage of the same bill by the House of Representatives on 23rd April, with an expenditure outlay of N4.493 trillion (up from the N4.425 trillion proposed by Mr. President). This represents an increase of N67.43 billion.”
She said it is important to note that the NASS approved the N100 billion and N45.52 billion provisioned for fuel and kerosene subsidy proposed by the Executive.
According to her, “the highlights of the analysis of the 2015 Appropriation Bill passed by the NASS show that the increase in expenditure outlay by N67.43 billion over the proposed budget was financed by the extra revenue from the $1 per barrel increase in the benchmark price (about N54.25 billion) and from the increase in Federal Government Independent Revenue by N39.294 billion. The balance of the increase (i.e., N26.11 billion) was used to reduce the deficit”.

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