Nigerian President Goodluck Jonathan approved the transfer of $1 billion from oil-revenue savings to be shared by the country’s 36 states and federal government.
The funds will be used to implement “people-oriented projects,” Rivers state Governor Rotimi Amaechi, who is also chairman of the Nigerian Governors Forum, said today in an e-mailed statement from the capital, Abuja.
Nigeria, Africa’s largest oil producer, relies on crude exports for about 95 percent of its foreign-currency earnings and 80 percent of government revenue, according to the Finance Ministry. The West African country, sub-Saharan Africa’s most populous with more than 160 million people, saves oil revenue above the budgeted price to meet spending shortfalls. The account currently has $9.2 billion, Amaechi said.
While there appears to be some restraint in spending, the marginal balance of the Excess Crude Account, or ECA, points to a “still-loose fiscal stance” by the Nigerian government, Samir Gadio, an emerging-markets strategist at Standard Bank Group Ltd. in London, said today in an e-mailed statement.
“Market players are concerned about this development given the absence of a credible and codified framework to accumulate fiscal savings on a sustainable basis,” he said. “The risk is also that the ECA could be largely depleted ahead of the 2015 elections which would weigh negatively on market confidence and increase Nigeria’s vulnerability to long-term oil boom and bust cycles.”
Nigerian state governors in December asked for $1 billion from the oil savings to help them complete projects that have already been started.