Governor of the Central Bank (CBN), Professor Chukwuma Soludo, on Wednesday set up a committee saddled with the responsibility of overseeing the management of the nation’s excess crude oil revenue.
The move will put to rest the controversy that trailed the management of the account especially from state governments.
 
He also said the official foreign exchange reserves had dropped from $43.17 billion at the end of May to $42.74 billion at the end of June
While CBN is of the opinion that the money that currently stands at about $9.6 billion be kept for the rainy day, state governments want it shared.
Prof. Soludo told reporters that the committee would fashion out the most transparent manner for managing the account into which earnings from crude oil in excess of the budget benchmark are paid, adding that the nation was likely to experience expansionary expenditure in the economy in the months ahead.

It was gathered that members of the committee were drawn from the three tiers of government.
According to him, part of the reason for the expansionary expenditure is the sharing of excess crude oil earnings as a result of shortfall in the projected revenue from oil, which was predicated on the production of 2.5 million barrels of crude oil per day at a projected price of $40 per barrel. The CBN governor said the three tiers of government had agreed to share N150 billion of which N100 billion had already been shared.

Professor Soludo, who noted that oil production had been volatile as a result of continued crises in the Niger Delta, said the 2007 budgetary benchmark of $40 was higher than the benchmark for the previous years.

According to him, “the committee noted the decline in gross official reserves from $43.17 billion at the end of May to $42.74 billion at the end of June. Reserves stood at $42.9 billion at the end of July as a result of increased foreign exchange sales at the official Dutch auction.
“The committee noted the actual and potential effects of the rising private foreign exchange inflows on the naira exchange rate. The inflows, comprising mainly foreign direct investment and portfolio investment averaged $674.6 million in the second quarter of 2007, compared with $500 million in the first quarter.

“Growth in aggregate domestic credit declined by about 9.12 per cent at the end of May and by 37.18 per cent in June 2007 relative to its level at the end of December 2006. The fall in aggregate credit was attributed to the decline in credit to government, which fell by about 50.6 per cent at the end of May and by 50.5 per cent at the end of June.

“Meanwhile, credit to the private sector grew by about 24.8 per cent in June which on annualised basis comes to 49.6 per cent, compared to the target growth of 30 per cent for the year,” he said.