Nigerian President is coming under increasing pressure to spend surging oil revenues instead of saving them
Nigerian President Umaru Yar’Adua is coming under increasing pressure to spend surging oil revenues instead of saving them to cushion the economy against future shocks, raising fears that the country’s economic reform programme could be at risk, FT reported.
Nigeria has earned a reputation for prudent economic management in the past few years by setting up a special “excess crude account” to save income earned when oil prices are high.
However, governors from Nigeria’s 36 states are pushing Mr Yar’Adua to allow them to spend a greater share of the billions of dollars earned every year by Africa’s biggest crude exporter, saying the existing system – introduced in 2004 – is illegal.
Economists fear that the plans could jeopardise growing foreign investment in Nigeria while others believe it threatens to hit the economy and fuel inflation.
Under the system, set up under Olusegun Obasanjo, the previous president, revenue earned when oil prices rise above a certain level defined in the budget are set aside in the account.