Finance Minister, Dr Ngozi Okonjo-Iweala has assuaged fears that current volatility in the prices of crude will negatively affect the economy as contingency measures are already in place to ensure that the economy did not suffer in spite of the drop in global oil price.
“First, we have to realise the dimensions of the situation and we are beginning to do that. With the team here, the D-G Budget, the Central Bank, we are looking at various scenarios. We are running our model in terms of the oil price shocks and so on, even quality shocks. And when you look at contingency scenarios, there are three ways you can manage them,’’ she said.
According to her, “you can either go outside or get resources to manage the system, but we are not planning to do that. We are not going outside to get resources at this moment. That is the pride that we have had.”
She said that government had no plans for such in the meantime.
She said that from the revenue side some positive result had emerged with additional income from to the Federal Inland Revenue Services.
“Because we were ahead of the curve in trying to bring on some extra help to FIRS, we gave a target of 500 million dollars which is about N75 billion to the FIRS backed by the McKinsey. That is helping to strengthen their capacity to improve audits and plug leakages. I am happy to say that of the N75 billion target they have already hit N44 billion of additional revenues in July. So, at least we will be able to increase our revenues, that have actually helped us,’’ she said
The Minister said that other area the team had been looking at was the expenditure side, which she said government had to be very careful in handling.
She reiterated the need to build up buffer such as the Excess Crude Account to help reduce any shock the economy might experience.
Commenting on the advice by IMF and World Bank on effective management of the economy at the meeting, she said they advised Nigeria to raise its buffer to $6.3 billion.
“The IMF told us that we need a buffer of 6.3 billion dollars. We are at a buffer of about 4.1 billion dollars. So we have a little bit of short fall in the buffer but we have been able to manage it and I strongly believe that we can keep this economy on an even kiln even with that. We were estimating a buffer of five billion dollars, they thought we needed more and we have been moving towards that. So, we will look at our buffer and see how we strengthen it,’’ she said
She also said that the team would equally look at the expenditure side to see what could be done and assured that the economy would be effectively managed.
The Federal Government has come up with a contingency plan that involves raising the targets of the key non-oil revenue agencies like Federal Inland Revenue Service (FIRS) Nigerian Customs Service (NCS) and for next fiscal year in order to insulate the economy against the fall in the prices oil in the international market.
And speaking at a ministerial press briefing in Abuja, the minster, who did not disclose the new revenue targets given to the agencies for next year, said the FIRS had realised N44bn out of N75bn initial target, while the Customs realised N713bn between January and September out of its initial N1.23tn target.
In addition, government has also become more serious at removing ghost workers from its payroll and has therefore, invited the Independent Corrupt Practices and other related Offences Tribunal to investigate and prosecute 60,000 ghost workers and pensioners that had been weeded out from the government payroll.
She said, “We must shift the economy to non-oil revenue and we are already working hard on non-oil. Our revenue to GDP ratio is below that of other countries. We need to work very hard on non-oil and deliver on the non-oil sector. The global economy is volatile, oil prices are falling and as a matter of priority, we are developing a contingency plan to bring stability to the economy.”