The Fiscal Responsibility Commission on Wednesday urged the Federal Government to be more prudent in its spending to guard against shortfalls in its income from crude oil.
Dr. Aliyu Yelwa, the Chairman of the commission, made the call in an interview with the News Agency of Nigeria in Abuja.
Yelwa said that the call became necessary owing to the volatility of the price of crude in the international market.
He underscored the importance of saving the income from crude in the Excess Crude Account (ECA) “for a rainy day”.
He said: “When you agree that the money belongs to all, you argue that the savings from that money should be divided immediately and then it doesn’t make sense.
“If you budget N1 trillion and for whatever reason you manage to earn N1.1 trillion, then that .1 should be put aside for a rainy day.
“Bear in mind that we run an economy of over 50 per cent based on one source of revenue – oil.
“We have no control over oil price and to a large extent we have no control over what we produce.
“Since you have no control over the price, it will be going up and down.
“If you say every penny you get from oil should be spent, one day you will find out that your base price is completely wrecked.”
The commission’s chairman also said that the idea of saving was to ensure that Nigeria’s future generation was well-catered for.
He said: “Since we do not go on daily budgeting and in fact we don’t even do flexible budget except to the extent that we do supplementary.
So to avoid that kind of situation, you say okay, this oil is selling at $60 but let us not calculate our earnings at $60.
“Let’s put it at $40.
“Calculate our likely income on the basis of $40 per barrel.
“Let it go to $50, or let it go to $60, you still have your budget intact.
“But one day, for no fault of your own, it will fall to below $40.
If you are consuming everything (income) as it comes, what will you do?
“So, we say we have this ECA, this excess should be put in this account, so that one day, instead of having flag, you have drought.
“If we eat up everything today and tomorrow we die, what will we leave for our children?
“Trouble!”
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