Falling global oil prices in the past couple of weeks put Nigeria’s economy at great risk, hence the need to adopt tighter fiscal and monetary policy, Minister of Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala has said.
With Nigeria’s economy dependent on oil, – crude oil export accounts for about 83 per cent of Nigeria’s total export – continued fall in global oil prices calls for action in order to ensure economic stability. She however said borrowing is not an option for the country.
“As external pressures mount in the face of falling commodity prices, the pressure to ‘go a-borrowing’ to maintain fiscal expansion will also increase. But we cannot afford to do this. We need to make necessary adjustments with tighter fiscal and monetary policy, and we need to build up economic buffers beyond the mere 5.4 months of imports the region is estimated to have,” the minister said at the Institute for International Finance’s 2014 Africa Financial Summit in Lagos, hosted by Access Bank Plc.
She also noted that countries across Africa must rise to the challenge the current global economic situation poses on their economies.
“Without a doubt, this slowdown in global economic activity, coupled with the end in the quantitative easing in the United States of America, will affect sub-Saharan Africa’s economy, in addition to other regions specific challenges we face at the moment,” said Okonjo-Iweala
“As we all know, many countries on the continent depend on commodity exports as the main source of revenue.
“Nigeria and other countries in the African continent must step back and learn the lessons of the ongoing economic transformation in the country. The Federal Government has put in place strong stabilization policy, but the most important thing is that we must be able to sustain it,” she noted.
She also advised that Nigeria and other countries across Africa should look for alternative revenue sources.
“Still on improving macroeconomic performance, countries in the region must aggressively look for alternative sources of revenues and stem leakages. It is now imperative to drive up domestic resource mobilization especially taxes,” Okonjo-Iweala said.