An Abuja-based group, the Society for One Nigeria has defended Present Goodluck Jonathan’s administration over the allegation by former President Olusegun Obasanjo that Nigeria is facing economic problems due to the failure of the present administration to plan for a rainy day.
Obasanjo had, Monday, told women leaders in the South-West who visited him in his Otta country home that the Jonathan administration crashed the nation’s economy by depleting its foreign reserves.
In a statement today, signed by the group’s Publicity Secretary, Alhaji Abubakar Danladi, it argued that the fall in Nigeria’s foreign reserves and the depreciation of the exchange rate are both related to what it called “exogenous global factors,” the factors which the country could not control by itself.
Danladi said that Obasanjo to boasted that he left $43.17billion in reserves, but did not mention that his ability to do so was simply as a result of his luck with rising oil prices during his tenure.
The statement read: “As at May 1999 when Obasanjo became President, oil prices were $14.74 per barrel. By May 2007 when he left office, oil prices were $68.75 per barrel, representing an increase of more than 350 percent.
“This increase in oil prices enabled the Obasanjo administration to increase our foreign reserves to about $43.17billion in 2007.
“In contrast, President Jonathan assumed office in May 2011 when oil prices were $117.18 with Foreign Reserves at $32.1billion.
“Since mid-2014, global oil prices have been falling precipitously from a peak of $116 per barrel in January 2014 to about $58 per barrel in January 2015.
“Despite this significant fall in global prices coupled with rising incidence of oil bunkering and sabotage of oil facilities, the country has managed to maintain $34.4billion in Foreign Reserves, a level that is higher than the $32.1billion which President Jonathan met when he assumed office.”
According to Danladi, Nigeria is undergoing significant pressures from spillovers resulting from three factors that no single country has control over.
He listed the factors as end of Quantitative Easing by the United States Federal Reserve which implied that the monthly injection of about $85billion into the global economy suddenly ended; the sustained fall in oil prices from a peak of $116 per barrel in January 2014 to about $58 per barrel in January 2015; and subsisting sanctions against Russia for its alleged role in the ongoing crisis in Ukraine.
He said that given Nigeria’s interrelatedness with the global economy as well as the nation’s dependence on crude oil proceeds, the economy had been affected like other economies.
He listed some emerging market countries that have experienced a drop in their foreign reserves as a result of drop in global oil prices as Chile, Czech Republic, Egypt, Ghana, Hungary, Kenya, Malaysia, Morocco and Russia among others.
He added that while some countries like Russia has depleted their reserves by nearly $75billion during 2014, Nigeria lost $9.2billion in reserves from the reduction in the price of crude oil.
He said although the average depreciation in exchange rate for the countries under consideration was about 11 percent, Nigeria’s exchange rate depreciated by eight percent. [myad]
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