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| Ngozi-Okonjo-Iweala |
The Federal Government yesterday
defended its insistence to maintain $75 per barrel oil price benchmark for
crude oil in 2013 budget, saying there was need to safeguard the nation’s
economy from vagaries of the commodity’s price at the international market and
the inflationary trend.
Coordinating Minister for the
Economy and Finance Minister, Dr. Ngozi Okonjo-Iweala, told newsmen that the
action was in line with what is obtainable in all oil dependent nations
globally.
Iweala, who shed more light on the
2013 spending proposal, therefore appealed to members of the National Assembly
to see reasons with the benchmark proposal, as contained in the 2013 fiscal
spending plan.
The House of Representatives, last
Tuesday, while passing the Medium Term Expenditure Framework upon which the
2013 Fiscal plan is drawn, described the $75 benchmark proposal by the
executive as very conservative and vowed to raise the benchmark by $5 in order
to jerk it up to $80.
But Iweala yesterday defended the
$75 Benchmark price, saying it was arrived at following sound macro-economic
analyses
“The Benchmark price is sensible at
$75. We will put forward the argument on why we want $75. We did this on the
basis of a model that estimate moving average for the next five years. This is
a price that is similar with what other countries that are oil dependent are
using.
“What we are pricing is within the
armbit of what other countries are using. It is to safeguard the economy. If we
go with the $80 benchmark proposal a lot of liquidity would be thrown into the
economy and this can lead to higher inflation and exchange rate depreciation.
And this chokes off the private sector.
“We also have to be mindful that the
art of forecasting is a tricky one becuase the prices are volatile. Even the
World Bank and IMF has just released a forecast, which says the recovery would
be slow and demand low. That’s why we want to be more caution and very
prudent,” the Finance Minister further defended.
The minister explained that it was
in line with the same philosophy of fiscal prudence that the Federal Government
was embarking on checking the now rising domestic debt stock which is to go
down this year by N17 billion, falling from N852 billion in 2011, N744 billion
in 2012, and to N727 billion in 2013.
And to ensure that government does
not roll over her debt commitment, she said for the first time, a sinking fund
of N100 billion was being established in the 2013 fiscal year for repaying
government’s maturing debt obligations and to curb the rising domestic debt
profile.
But the House of Representatives
yesterday said the $75 per barrel of crude oil as announced by President
Goodluck Jonathan in his budget speech was unrealistic and therefore
unacceptable.
Chairman of the House Committee on
Finance, Abdulmumin Jibril, who fielded questions in a reaction to the budget
presentation during a session from reporters, said the explanation by the
executive that by fixing the benchmark at $75, it would be able to save more
for the country does not hold water.
In approving the Medium Term
Expenditure Framework (MTEF), the House of Representatives had jerked the
benchmark from $75 to $80.
He said the decision of the
Parliament was meant to finance the deficit of N1.037 trillion in the 2013
budget, adding that if the $80 benchmark is adopted, the deficit would be cut
down to N666.234 billion.
He explained that the submission by
the Executive that it intends to save was not tenable adding that the
‘economics of savings’ being propagated by the executive was not in the best
interest of the nation.
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