The Governor of the Central Bank of Nigeria, Lamido Sanusi, on Wednesday kicked against the move by the House of Representatives to raise the crude oil benchmark for the 2013 budget above $75 per barrel.
The 2013-2015 Medium Term Expenditure Framework and Fiscal (MTEF) Strategy Paper proposes to retain the 2012 benchmark of $75 for the 2013 budget.
However, the Joint Committee of the House on Finance and Legislative Budget/Research is recommending a raise in the benchmark to around $82.
The committee, which is headed by Abdulmumini Jibrin, in a preliminary report, argued that increasing the benchmark “will bring in more revenue and cut the deficit of the 2013 budget reasonably.”
According to the committee, the proposed budget already captures a deficit of over N1.3 trillion.
Members of the committee, who met with Mr Sanusi in Abuja on Wednesday to discuss the MTEF, also held the view that raising the benchmark would reduce domestic borrowing, currently put in excess of N701bn.
Arguing the position of the committee, Mr Jibrin said, “Why do we have a problem with increasing the benchmark?
“This will reduce deficit and the money generated will be tied to the provision of services and projects that we are currently borrowing to address.”
But, Mr Sanusi disagreed with the lawmakers.
He said, “Benchmark does not necessarily give you more revenue. You can increase it to $100 if you like, but does that bring money?
“What is important is to increase crude oil production and sales. The $75 is even on a high side relative to other countries. The solution to deficit is not to increase benchmark but to increase the production of crude oil and our OPEC quota.”
He called on the government to tighten security around oil pipelines in the Niger Delta so that it could save the $7bn allegedly lost to illegal bunkering yearly.
“Go and stop the stealing of oil in the Niger Delta. We are losing $7bn to oil theft yearly. This fact was stated by the Minister of Finance. So, go and stop the bunkering; go and bomb the illegal refineries,” he said.
Mr Sanusi observed that Nigeria was always concerned about oil benchmark because it was an import-dependent economy.
He said the government must restructure its development programmes to focus on local production and exportation of finished goods.
The CBN boss said, “We will continue to have these issues if we continue to import things that we can produce.
“We have no business importing fuel; we have no business importing rice from Thailand; we should not be importing meat and all sorts of things that we don’t need because we can produce them.”
To restore investor confidence in the economy, Mr Sanusi advised the government to pursue stable economic policies that would guarantee returns on long-term investments for the private sector.
“People have to be sure that if they invest in a project, another minister will not come and revoke it. You see, they take loans to invest; the investments should not be tied to change of office holders,” he told members of the committee.
He claimed that the myriads of problems confronting the country, including terrorist activities in the North, were caused by economic woes.
Mr Sanusi said, “Kaduna and Jos used to be peaceful cities. Jos, at a time, was the most peaceful city in Nigeria. The youths became militia when the mines were closed. The parents could no longer cater for them.
“Kaduna was flourishing until one after the other, the textile industries were shut.”
