Sanusi said this while presenting a speech at a forum organised by members of the Metropolitan Club in Lagos Tuesday.
Responding to questions on Nigeria’s
external reserves, the CBN helmsman who apparently was making reference
to a recent feud between the Federal Government and a former
vice-president of the World Bank, Mrs. Oby Ezekwesili, said the country
never
had $67 billion reserves in its history.
He however said: “It is a debate I will
like to avoid getting into deliberately because it is a debate where you
have the truth on both sides.
“The highest level reserves had been was
$62 billion under the late President Umaru Yar-Adua. There is also a
certain truth to a basic proposition that if we save money when oil
price is high, it is expected that when oil price crashes, we would
de-save.
“Look at Germany, United States, United
Kingdom, after the crisis, they all had huge deficits. So our deficit
resulted from a reduction in reserves.
“Now having said that, no one can deny
that between 2010 and 2011 when oil price was going up, we should have
saved more than we actually did and we spent more than we ought to. As
CBN governor I spent the whole of those two years talking about fiscal
leakages.”
He noted that it was right for questions
to be asked, especially in a period when payment for fuel subsidy which
is paid from the Excess Crude Account (ECA), rose sharply from N300
billion to N2.1 trillion.
Despite the relative price stability
recorded by the economy, Sanusi also stressed the need for
diversification of the economy, saying that “all it takes is for oil
price to go to $40 per barrel for us to go back to where we were. We
need to get the economy to a point where if oil price crashes to $10 per
barrel, even if we feel the hurt, we would not cause a distortion.”
Sanusi however acknowledged that the
Coordinating Minister for the Economy/Minister of Finance, Dr. Ngozi
Okonjo-Iweala, has done a lot to address the fiscal leakages in the
economy.
“I must say that there have been
tremendous amount of progress made on the fiscal side. We have seen a
lot of work being done to shut down some of these leakages and it is
that work that is being done by the finance ministry since Ngozi took
over that has actually helped in bringing up the reserves and
stabilising the exchange rate,” he added.
Speaking on the financial system, he pointed out that the sector contributes only four per cent of GDP. He however argued that: “Fixing the financial system doesn’t fix much. How many people are employed in the financial system compared to the number of people employed and the impact you get from the agricultural sector, manufacturing?
Speaking on the financial system, he pointed out that the sector contributes only four per cent of GDP. He however argued that: “Fixing the financial system doesn’t fix much. How many people are employed in the financial system compared to the number of people employed and the impact you get from the agricultural sector, manufacturing?
“Financial services sector cannot be the
engine for growth. I have had this debate over and over again about
bank workers being sacked. The banking industry is not set up to create
jobs within itself; it is set up to provide capital to people who create
jobs. By the time your biggest employers become the banks and the
government, you have a problem. The government and the banks are
supposed to build the rest of the economy.”
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