By Festus Akanbi and Goddy Egene

The Central Bank of Nigeria on Thursday announced that the Excess Crude Proceeds Account stood at $9.57bn by April 25, 2007.




Nenadi Usman, Minister of Finance

The bank, which also called for the review of a section of the constitution that deals with external reserves management, said that the account represented 22.2 per cent of the current external reserves of $43.2bn.
Speaking at a workshop organised by the CBN for finance correspondents and business editors in Ilorin, Kwara State, the bank’s Director of Foreign Operations Department, Mr. Muhammed Nda, explained that the build-up in excess crude account and external reserves was due to the upsurge in oil prices and fiscal prudence.
Nda said that Section 162 (3) of the 1999 Constitution should be reviewed to give the bank legal backing to prevent monetisation of excess crude reserves when necessary.
That section of the constitution makes it mandatory for the sharing of the country’s reserves among the federal, state governments and the local councils in each state.
This sharing takes place sometimes even when there is too much liquidity which eventually put more pressure on liquidity system. This has not led to the optimum implementation of the foreign reserve management policy of the bank.
Nda, who was represented by a Deputy Director in the FOD, Olu Adaramewa, also called for the speedy passage of the Fiscal Responsibility act currently before the National Assembly, saying that it would help in the judicious spending of reserves.
While the apex bank would have restricted the ways the foreign reserves are shared, another Deputy Director, FOD, CBN, Mr. Jide Aluko, had on Wednesday said that the bank lacked the statutory power to act against the wish of the government on the issue of monetization and the sharing of the nation’s external reserves.
Aluko said that the CBN holds it a duty to carry out all the instructions from the government officials on the monetisation of the nation’s reserves.
He, however, warned that the current system might boomerang if urgent steps were not taken to remedy the situation, noting that there were fears that oil, the major earner of government revenues, might dry up or prices might nosedive.
Meanwhile, Nda said that a fund for the future generations should be established to sustain the savings initiatives already started by the government.

Source: Punch