By Camillus Eboh
(ABUJA,Reuters) – Nigeria expects economic growth for 2015 to reach 6.75 percent, an improvement on this year’s forecast of 6.2 percent, despite the risks posed by falling global oil prices to government revenues, its finance minister said on Tuesday.
Ngozi Okonjo-Iweala said the volatility in the oil price over the past two months, coupled with production shortages in Nigeria, may force the country cut its spending while it taps its non-oil sector for revenues.
But giving the first forecast for 2015 in a year, she said the economy was growing at 6.54 percent in the second quarter of 2014 and was estimated to grow at 6.75 percent by next year.
Brent crude oil, which Nigeria produces, has lost more than 25 percent since June. Losses accelerated in October on signs the Organization of the Petroleum Exporting Countries had no plan to cut output.
“Right now we have fluctuations in prices and quality of product that we sell. We may have to cut down on expenditures, … to mobilise more money, look more in the direction of non-oil sector,” Okonjo-Iweala told a news conference. “But Nigeria is not broke.”
She said Africa’s biggest economy had delayed a monthly meeting where it was meant to distribute September revenues to the three tiers of government by a week.
Nigeria government revenue had been declining partly due to production outages from crude oil theft and pipeline shutdowns. Government revenue fell 4.6 percent in August to 601.6 billion naira ($3.7 billion).
The sharp fall in the oil price has also hurt the local currency and forced the government to issue bonds at higher yields to draw investors.
On Tuesday, the naira eased to an 8-month low of 165.55 against the dollar, as importers and companies cut their exposure to the local currency while the government priced its 3-year bond to yield 12.14 percent at its latest auction, up 102 basis points from a previous sale.
Okonjo-Iweala said “U.S. demand (for Nigerian oil) has fallen to zero but has been substituted by China and India”, so sales remained strong.
Nigeria faces a hotly contested poll in February, and its fiscal position always slips around election time, when spending on patronage to secure seats surges. This one is expected to be the most closely fought since the end of military rule in 1999.
Okonjo-Iweala said Nigeria’s oil savings account, the Excess Crude Account, was broadly flat since August at $4.11 billion and that its fledgling sovereign wealth fund had $1.55 billion in it.
The oil savings in the Excess Crude Account (ECA) have recovered this year, though remains way below where it was two years ago.
The ECA declined as low as $2.5 billion at the start of 2014, from around $11.5 billion at the start of January 2013, according to the central bank. (Writing by Chijioke Ohuocha; Editing by Tim Cocks and Alison Williams)
Read more: http://www.dailymail.co.uk/wires/reuters/article-2802063/Nigeria-sees-higher-2015-growth-oil-price-risk.html#ixzz3GqS6XXor
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