Since President Goodluck Jonathan presented his administration’s mid-term report and score card on May 29, many people have continued to ask for more facts and figures to enable them make an objective assessment of the performance of the country’s economy, which the government insists is doing well. In this detailed report, Finance Minister and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, with contribution from the Minister of State, Dr. Yerima Lawan Ngama, provides details of the performance and health of the economy, backing it up with facts and figures. Happy reading.
I want to begin with what it is that the Ministry of Finance does. I want to remind people of our mission. Our mission is to manage the nation’s finances in an open, transparent, accountable and efficient manner that delivers on the country’s development priorities. There are four basic things we do in managing these finances and helping to manage the economy. The first is macroeconomic management. It’s the job of the Ministry of Finance, working with the Central Bank, to have a stable macro-economy. If there’s no stability, if things are moving, exchange rate is volatile, inflation is high – we have experienced it in this country before – what happens? You cannot even begin to think of development of the economy. So, that’s one of our jobs.
The other, of course, is managing the finances and mobilising finances for the real sector of the economy; meaning the other sectors that create jobs can grow. Then we also have the job of supporting enabling reforms that make this economy move. And finally, we have the job of supporting job creation indirectly and directly. So, we’re going to talk about what the Ministry of Finance does and has achieved in those four areas.
Let me start with something that we said during the mid-term report. The first is, on the macro-economy, I want to report that the economy is strong and stable. But of course, it faces challenge of inequality and inclusion; meaning that even though the economy is strong, we have problems with jobs and unemployment. We have problems with working to eradicate poverty. We need to move faster. We need to grow faster in order to tackle these problems. So, we are not saying that everything is solved, or that everything is great, but it’s strong; and that stability provides the platform on which we can use to solve the other problems.
What do I mean? We talked before that if you notice – everybody follows the exchange rate between the dollar and the naira – it has been relatively stable in these past two years at 155 to 160. At least, that is something you can evidence for yourself and attest to. It has been stable because we have also been able to accumulate reserves. People wonder why we are saving these reserves that are now almost $50 billion – we’re at $48 billion now. It’s very important because the reserves are what make the exchange rate stable. When the reserves are going down, that’s when you experience that instability and people can come and attack your currency. So, we have managed, working with the Central Bank – I also want to give them credit for good monetary policy – to be able to grow these reserves, stabilise, so that now, we have an exchange rate that can allow people to plan and allow people to do their work. As the Honourable Minister of Information said, inflation is coming down; from about 12.4% in May 2011, it has slowed to about 9.1% now and these all form the bedrock of this stability.
We have made savings. Part of our reserves is also the Excess Crude Account savings that we talk about. We have had about $4 billion in May 2011. We grew it to about 9 billion dollars equivalent at the end of 2012, and now we’re about $6 billion. Why are we down? Because the Excess Crude Account helps us to manage the economy and keep growing even when we experience shocks like when oil production comes down because of either oil theft, or leakages from pipelines and so on. You know, the money we have saved enables this country to keep going and we have enough to keep us going even in the face of shocks for another four to five months whilst we try to solve our problems. This is something that Nigeria did not have before and we are very proud of it. In the past, when we experience shocks, what did we do? We would have to go to the IMF or World Bank to go and look for money – the IMF in particular to shore up the economy, to shore up our balance of payments (that’s what economists call it). But now, even through all the ups and downs that we have experienced, have we gone there? No. Because Nigeria has now put itself – with the existence of this Excess Crude Account – in a position where in the event of any shock, we can go there to stabilise ourselves. That’s why Nigerians must support this account, the saving of this money; the Sovereign Wealth Fund. This country like a family must be able to put money aside so that if you experience shock, you don’t go around begging, you can stabilise yourself with your own savings. That’s what we manage to do.
The second thing I want to talk about is about GDP growth. This stability has enabled the economy to grow. Certain sectors are growing – I will come to that. Overall, this economy is growing and growth is projected at 6.75% by us; by the National Bureau of Statistics in 2013. Even the IMF has projected higher growth, but we’re being very cautious. Over there [referring to a slide], you will see how we compare with some other countries; with the whole of sub-Saharan Africa, they are growing at 5.6%, so we are much higher; even the emerging markets, we’re higher than them. And you can see Brazil, China, South Africa – South Africa at 2.8%, we at 6.75% et cetera – so we are doing well!
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