By Omoh Gabriel, Business Editor
The Nation Excess crude account has been depleted fromÂ about $20 billion in 2007 toÂ onlyÂ $4.393 billion as at the endÂ ofÂ April, 2010. ThisÂ was disclosed at the week end by the Minister ofÂ State for Finance, Mr. RemiÂ Babalola who is the chairman ofÂ theÂ federation account allocation committee.
According to him, the total distributableÂ revenueÂ to all the tiers of government amounted to N 1.495 trillionÂ forÂ theÂ period ,JanuaryÂ toÂ March 2010. He, however, noted that N 758.06Â billion was distributed due to the use of the parameters ofÂ 2009Â appropriation since the 2010 budget was yet to be passed by the National Assembly and assented to.
The shortfall in the revenue distributed to the three tiers of government necessitated the augmentation ofÂ N 736.985 billion from the Excess Crude Account.
He said â€œWith augmentation for the months of January to March 2010 amounting to N 736.985 billion, the Domestic Excess Crude Account of N 212.559 billion will not be able to accommodate such figure hence a recourse to sourcing from the Foreign Excess Crude Account.
â€œThe implication ofÂ the foregoing is that with subsidy to Oil Marketers averaging N 34.73 billion monthly and monthly receipts ofÂ N 431.747 billion, the projected monthly distributionÂ mayÂ not be realizable.
â€œWe may thus be constrained to amongst others consider amending theÂ revenue profile ofÂ the 2010 budget or re-negotiate with all relevant stakeholders the monthly distributable amount pending improvements in the budgeted revenue profile,â€ he stated.
The minister was upbeat about the nationâ€™s economic outlook for 2010. He revealed that the real Gross Domestic Product ( GDP ) grewÂ to 6.68 per cent in the first quarter of 2010 despite the challenge of illiquidity facing the domestic economy. He also noted that consumerÂ prices trended downwards during same periodÂ while the countryâ€™s external reserves stood at US$ 40.68 at the endÂ ofÂ March, 2010.
Much of the savings in the Excess crude account has been disbursed and what is left based on what the three tiers of government in the country agreed on will not be enough to make any significant impact on the budget if the prices of oil falls below the budget bench- mark.
It will be recalled that the federation account committee agreed in 2007 that N 1 trillion be set as the base for the savings and what ever is earned as excess revenue in any particular month that is above the one trillion mark, 80 per centÂ should beÂ sharedÂ among the three tiers ofÂ governmentÂ why 20 per cent is saved.
In 2007 the three tiers of government agreed that the sum of $ 5.6 billion is to be spent on power.
Babalola further disclosed that â€œthe balance in the Foreign Excess Crude Account at the end of April 2010 FAAC meeting was US$ 4.393 billion after setting aside the commitment to the Nigeria Integrated Power Projects whilst Domestic Excess Crude Account was N 212.559 billionâ€.
The Honourable Minister of State for Finance, Mr. Remi Babalola, on Friday advised Nigeria against any form of profligacy by all tiers of government to enable them address the various fiscal challenges likely to be faced in the near future.
He gave this advice in a speech titled â€œBetween Profligacy and Performanceâ€ presented at the Federation Account Allocation Committee (FAAC) meeting in Abuja . The meeting presided over by the minister was attended by the Accountant General of the Federation, Alhaji Ibrahim Dankwambo; Director of Home Finance in the Federal Ministry of Finance, Alhaji Gidado Mohammed; commissioners for finance and accountants_general from the 36 States, and the representatives of the Central Bank of Nigeria, Revenue Mobilisation, Allocation and Fiscal Commission, Debt Management Office, National Planning Commission, and revenue collection agencies, among others.
Babalola asserted that the growth of discretionary spending by all tiers of government has outpaced the annual growth rate of the overall economy over the past 10 years, with deficits being the expected consequence.
He said, â€œThe production and price assumptions in the 2010 budget leave minimal headroom for adjustment and expose the economy to higher risks of exogenous shocks. It reduces the accretion to our honey pot of Excess Crude account which is already below comfortable cushion. â€œIf we embark on any form of fiscal profligacy today it will certainly hinder our ability to address the various fiscal challenges we are likely to face in the near future.â€
He explained that current developments from nations like Portugal , Italy , Spain and Greece had shown that while it appears urgent to use massive public spending to stimulate an economy under stress, an economy wouldnâ€™t be able to sustain long_term growth under the weight of significant fiscal burdens.
â€œAt some point, what is considered a temporary economic prosthesis becomes a hindrance to the workings of the larger economy,â€ he added.
The minister, also at the FAAC meeting, presented details and breakdown of the revenue distributions from the Federation Account and the Excess Crude Account ( ECA ) in the first four months of Fiscal 2010.