Nigeria’s Government to Run Down Oil Savings Account to Pay Debt

Nigeria’s government plans to run down its oil savings to offset revenue shortfalls and pay debt, such as salaries for state workers.

The Excess Crude Account, which has a balance of about $2 billion, will be drawn down by $1.7 billion to allocate to the federal, state and local arms of the government, Accountant-General Ahmed Idris told reporters on Monday in the capital, Abuja.

Nigeria accumulates revenue in the ECA when the oil price exceeds the benchmark estimated in the budget. Those savings have dwindled from $21 billion in 2008, according to estimates from the International Monetary Fund.

A lack of savings and an almost 50 percent slump in oil prices in the past year is putting pressure on the government of Muhammadu Buhari to deliver on promises that helped to sweep him into office on May 29. Buhari, 72, said last month his government is facing severe financial strain, with a Treasury that’s “virtually empty.”

Nigeria is Africa’s biggest oil producer and crude makes up about 70 percent of government revenue.

“The federation accounts allocation committee is going to meet and we are going to distribute as agreed and directed during the National Economic Council meeting last week,” Idris said.

The slide in oil prices forced the government of Buhari’s predecessor, Goodluck Jonathan, to cut back spending and devalue the naira as foreign-currency reserves fell. Buhari has delayed naming a cabinet until September, leaving Africa’s most populous nation without a finance minister to steer the economy.

The naira was unchanged at 199 against the dollar on the interbank market as of 8:30 a.m. on Tuesday in Lagos, the commercial capital, taking its decline to 7.8 percent this year.

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