Fighting Corruption Is Dangerous by Ngozi Okonjo-Iweala

Author:Ngozi Okonjo-Iweala
Language: eng
Format: epub, pdf
Tags: Nigeria; corruption; anti-corruption; economic development; development; finance minister; finance; Nigerian economy; Nigerian government; Goodluck Jonathan; 2011-2015; West Africa; Africa; African development; oil; embezzlement; pension scam; kidnapping; Chibok; Boko Haram; Kamene Okonjo
Publisher: The MIT Press
Published: 2018-05-15T04:00:00+00:00

Hon. Abdulmumin Jibrin was supported by the Speaker of the House, Hon. Aminu Tambuwal, who expressed frustration at the idea of using a lower benchmark oil price as a means of enabling the country to save more for a rainy day. Hon. Tambuwal declared “that he cannot rationalize why political appointees and civil servants are insisting that the revenue generated by the government should be saved for the future when several sectors are underfunded and crying for a lifeline” and that the “the Budget Office and Ministry of Finance are said to be the major problem of the government ministries, departments and agencies (MDAs) in carrying out their statutory responsibilities. The House was always in a friction with the Budget Office because it tinkers with the budget of the MDAs thus making them perform below expectation.”18 Hon. Tambuwal went on to say that “We are still dragging with the executive arm of government on the issue of oil benchmark. … How do you save money when you are hungry?”19

For the Finance Ministry, a $75 per barrel benchmark that was already $3 above what the Budget Office model forecast was fiscally loose but still manageable. But adding an additional $5 per barrel on top of that was fiscally irresponsible. We issued our own media statements and explanations so that the Nigerian public might understand why the $80 benchmark price was a bad idea. Channels Television covered this on October 15, 2012:

According to a statement from the minister’s aide, increasing the benchmark price to $80 would lead to an increase in liquidity, and be harmful for many of the Government’s macroeconomic forecasts. Based on our estimates, inflation rates would certainly rise significantly. The exchange rate would come under severe pressure, leading to a depreciation of the ₦. High inflation would result in higher interest rates. A combination of high inflation, interest rates, and an unstable exchange rate is bad for economic planning both for government and for private businesses. Overall, we know that macroeconomic volatility is bad for growth. Second, the legislature’s proposal is premised on an overly optimistic outlook of global oil prices. The current world oil price is not based on actual economic fundamentals, but rather on uncertainties due to conflict in the Middle East. Nigeria cannot base its plan simply on the expected misfortune of others! Third, in our view, current global oil prices are not sustainable. There are two reasons for this: (a) possible reduction in global oil demand, due to recession in the Eurozone, low growth in the US, and economic slowdown in China and India; b) increased global oil supply as new discoveries in Africa and elsewhere come on stream. In addition, with the end of the Libyan crisis, approximately 1.6 mil barrels per day would be returned to the world market. Fourth, the legislature’s proposal would result in much lower savings in the ECA [Excess Crude Account]. To be precise, it would deny the ECA of significant additional inflow. These savings are necessary to cushion

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