The Federal Government on Wednesday described as untrue claims by former President Olusegun Obasanjo that the administration of President Goodluck Jonathan had squandered the nation’s foreign reserves.
The Federal Ministry of Finance, in a statement in Abuja, said there was never a time the reserves rose to $67bn as alleged by Obasanjo.
It said that the reserves were, among others, used to settle foreign currency obligations, including the importation of equipment for the power sector.
Also, the Peoples Democratic Party’s Presidential Campaign said Obasanjo was entitled to his views.
The former President had on Monday while responding to a call by a delegation of market women led by the Iyalode of Yorubaland, Chief Alaba Lawson, and the Iyaloja General of Nigeria, Chief Folashade Tinubu-Ojo, to lend his voice to the socio-economic crisis rocking the country, said the nation did not deserve the situation it currently found itself.
He said the administrations after him had gradually depleted the foreign reserves from the $67bn he left to just a little over $30bn.
But the Finance ministry said anyone familiar with foreign reserves management would be aware that the Federal Government could not dip its hands into them.
Like in other countries, it explained that the management of external reserves was one of the statutory mandates of the Central Bank of Nigeria.
Quoting from Section 2 Sub Section (c) of the CBN Act (2007), it stated that the bank had been mandated to “maintain external reserves to safeguard the international value of the legal tender.”
It said going by this provision, no President since the democratic dispensation had contravened the Act.
The statement read in part, “It is absolutely not true that the administration of President Goodluck Jonathan has squandered the nation’s reserves.
“The facts are clear and indisputable. At the end of May 2007, Nigeria’s gross reserves stood at $43.13bn, comprising the CBN’s external reserves of $31.5bn; $9.43bn in the Excess Crude Account; and $2.18bn in the Federal Government’s savings.
“These figures can be independently verified from the CBN’s records. The figure of $67bn cited in some recent commentary is therefore factually incorrect.”
It added, “It is a misconception to think that reserves are immutable or cast in stone. The reality is that since May 2007, the reserves have fluctuated in line with developments in the international oil market, rising from $43.13bn at that time, peaking at $62bn in September 2008 during the Yar’Adua/Jonathan administration when oil prices reached a peak of $147 per barrel, and falling subsequently to a low of $31.7bn in September 2011.
“This fall in reserves was largely a result of the vicissitudes of the global economy and oil market, which caused the CBN to intervene, using some of the reserves to defend the value of the naira.”
It said whenever an agency of government or a private individual/company needed to make a payment in foreign currencies, it must provide the naira equivalent to the CBN in exchange for the required foreign currencies.
On the Excess Crude Account savings, a component of the reserves, the ministry said this was largely used to cushion the harsh effects of the global financial crisis of 2008 and 2009 on the economy.
It explained that Nigeria was one of the few countries in the world that did not seek assistance from international financial institutions at that time.
It noted that the fiscal stimulus used to shore up the economy during that period was shared by all the three tiers of government.
It said the savings in the ECA were also used to pay for fuel subsidies for the entire nation and that sharing of the fund continued after the crisis had ended.
While agreeing with Obasanjo that the savings in the ECA should have been higher, the ministry noted that the fact that a number of governors acted against strong professional advice to insist on the withdrawal of the funds led to its depletion.
It stated, “It is on record that states even took the Federal Government to court on this matter, and the case is still pending at the Supreme Court.
“It is also worth noting that the Jonathan administration built the first ever Sovereign Wealth Fund for the nation in which savings are being made for future generations of Nigerians and important infrastructure investments are being supported.”
Similarly, the Director of Media and Publicity, the PDP Presidential Campaign, Chief Femi Fani-Kayode, said at a press conference in Abuja that Obasanjo was entitled to his views.