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Nigeria: Nigeria takes cautious measures as crude oil price tumbles

 Nigeria is considering a slash on the price of its crude oil in view of the downward slide of oil prices in the international market, the country’s Coordinating Minister for the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala said here Sunday.

The minister said at a media briefing that a proposal of US $73 per barrel would be sent to the National Assembly for consideration and approval as against the US $78 per barrel proposed in the 2015 budget of the Federal Government.

International market price for crude oil was US $74 per barrel on Friday.

According to the minister, there was need to revise the proposal in Nigeria’s Medium Term Expenditure Framework to ensure that the economy will not suffer a significantly negative impact.

She explained that among measures intended to cushion the effects of the global drop in the price of oil, government would take money from the excess crude account to absorb some immediate shocks.

“The Nigerian government is on top of the situation and so there is no need for the citizens to panic,” Okonjo-Iweala said, stressing that the Finance ministry of Finance has been closely  watching the global trend in oil prices.

“We will continue in the meantime to manage the economy as we have always done. There is no doubt that oil prices will keep going down. But the economy continues to exhibit some strength. We need to keep growing in order to keep creating jobs.

“Every economy that is well managed like ours doesn’t wait for things to happen to them. We won’t compete by printing money.  We will not also compete by borrowing. But we will borrow concessionary loans to fund infrastructure.  We don’t want to do local borrowing,” she said.

On the amount to be taken from the excess crude account, held by the federal government on behalf of the federating units, the minister stated: “We will not deplete it. But we will take about half of it.”

Underlining the need for the country to work together as one at this period, Okonjo-Iweala said: “We have shown that when Nigerians work together, we win. We did it for Ebola and we succeeded. Panic is not a strategy in this situation. All we ask of Nigerians is to be understanding. We can’t just print money and be spending. You peg your spending to what you can earn.”

Noting that the government was concerned about ‘the common man’, the minister assured that salaries of federal government workers won’t be affected by the development, but added that travels by government officials would be permitted only when it is absolutely critical as a check had been put on foreign travels.

According to the minister, the best  way to protect the interest of the ordinary people is to control inflation as much as possible, expand the economic base, strengthen the sectors that drive growth, boost critical infrastructure and create more jobs.

She said the falling prices of crude oil is an opportunity for Nigeria to channel more of its energies to greater diversification and refocus efforts towards the non-oil sectors in preparation for a future with less oil revenue.

Okonjo-Iweala went on: “The drop in oil prices is a serious challenge which we must confront as a country. We must be prepared to make sacrifices where necessary. But we should also not forget that we retain some important advantages such as a broad economic base driven by the private sector and anchored on sound policies.

“Our strategy is to continue to strengthen the sectors that drive growth such as agriculture and housing while reducing waste with a renewed focus on prudence.

“Given the nature of the oil market, we needed to see the extent and trend of the oil price in order to take the right measures. Panic is not a strategy.

“It’s important that our strategies are based on facts and a clear understanding of both the strengths of the economy and the challenges posed by the drop in oil prices which is currently at $79 for our premium Bonny Light Crude.”

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