Â The Federal Government warned Friday against reckless spending, in the wake of fresh statistics that revealed a sustained decline in external reserves.
â€œIf we embark on any form of fiscal profligacy today, it will certainly hinder our ability to address the various challenges we are likely to face in the near future,â€ minister of State for finance Mr. Remi Babalola said.
â€œWe are surely not in robust times despite favourable oil prospects,â€ he said, adding however that signs of a â€œpalpableâ€ recovery meant that â€œwe are slowly but surely out of the contagion effect of the economic meltdown.â€
Nigeriaâ€™s foreign reserves have been shrinking since July 2007 when they stood at 67 billion dollars, dipping to 40.48 billion dollars at the end of March this year.
Officials blamed the slump on unrest in the oil-producing Niger Delta area.
Babalola speaking at the start of a monthly meeting of the Federation Account Allocation Committee, said the past 10 years, growth in discretionary spending by all federal, state and local government outpaced the annual growth rate of the overall economy, resulting in deficits.
The â€œimpressive growthâ€ in GDP last year, against the backdrop of a global economic downturn, has continued into 2010, he added, thanks largely to increased growth in the non_oil sector.
â€œReal GDP grew by 6.68 percent in the first quarter of 2010 despite the challenge of illiquidity facing the domestic economy,â€ he said.
Nigeria now is producing more than two million barrels of oil per day, twice as much than a few months ago, after a government amnesty to armed militants in the Niger Delta resulted in relative peace.