The Nigerian Economic Summit Group (NESG) has detailed how state governors spent the allocated country’s $50 billion excess crude account in 2010, funds that could have been used to address subsidies and other critical financial issues.
This was disclosed yesterday by NESG’s C.E.O, Dr. Tayo Aduloju during his visit to The Punch.
Aduloju recollected that the outcome of the global financial crisis of 2007 and 2008 was minimal on Nigerian firms due to the solid substantial fiscal buffer in the excess crude account, which prevented the country from external shock.
$50 billion fund was disbursed to the governors across all states by the Federal Government during the period of late President Umaru Musa Yar’Adua’s death and when former President Goodluck Jonathan came into power, said Aduloju .
According to him, collapsing the fiscal buffer the country had built over a decade moved the subsidy operations from a savings model to a revenue-based approach, forcing the Federal Government to fund the fuel subsidy through crude oil sales instead of ECA funds. “Between 1999 and 2010, we operated a savings-based subsidy operation. In other words, we were paying for the subsidy from savings. We were not borrowing to pay the subsidy.”
We were simply paying from the Excess Crude Account because we managed our first boom well. I think when former President Obasanjo left office, the Excess Crude Account had over $60billion.
President Buhari had concerns with the production of crude oil in the first six months of his government which made the country move from a transformation agenda to a change agenda during his regime.
Aduloju argued that since 1999, successive administrations in the country have operated different fuel subsidy models, but the poor management of fiscal resources has increased the financial crisis resulting from the mismanagement of the fuel subsidy.
“The subsidy removal that Tinubu inherited is not the same as the subsidy removal that Buhari inherited, and it’s also not the same as what Jonathan faced. They are different operations. But the consistent issue is that each mismanagement of our fiscal resources by previous governments compounded the problem for the next government,” he stated.
The NESG boss added that the biggest challenge under the current administration is not the removal of the fuel subsidy, but the lack of transparency. Until the Federal Government fully examines the financial strain on the economy, there will be no headway.
He emphasised that the fuel subsidy itself isn’t the country’s core issue but rather the lack of transparency, which has created a massive trust gap between the government and the people.
He stated that the many economic challenges facing the country will be effectively tackled at the upcoming NESG at 30 Summit, scheduled for October 14th to 16th, 2024, in Abuja.
