By Segun Odeleye
Between December 2012 and January 2014, Nigeria’s Excess Crude Account dropped from US $11.5 billion to US$2.5 billion.
This was disclosed by Finance minister and coordinating minister for the economy, Dr Ngozi Okonjo-Iweala who said that this sharp decline increases Nigeria’s risk of having a revenue crisis.
“We’re a little more vulnerable now than we were in the past,” Okonjo-Iweala said in a Bloomberg Television interview with Francine Lacqua at the World Economic Forum in Davos yesterday.
According to her, the ECA decline means there is now an absence of fiscal buffers, increasing the country’s reliance on portfolio flows and thus constituting the principal risk to exchange rate stability, especially with uncertainties around capital flows and oil price.
Okonjo-Iweala said that “The ECA, which used to cushion the economy against volatility, has been spent down to about $2.5 billion and needs to be increased this year.”