ABUJA (SundiataPost) -The Society for One Nigeria, an Abuja-based group on Tuesday rose in defence of the President Goodluck Jonathan administration, over the allegation levelled against it by former President Olusegun Obasanjo.
It said Obasanjo’s administration was just lucky as it did not experience oil price fall leading to his ability to increase foreign reserves to about $43.17billion in 2007.
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It said rather Jonathan’s administration should be commended that despite the fall in global prices coupled with rising incidence of oil bunkering and sabotage of oil facilities, the country has managed to maintain $34.4 billion in Foreign Reserves, a level that is higher than the $32.1 billion which Jonathan met when he assumed office.
The former president had on Monday said Nigeria was facing economic problems because the Jonathan administration has depleted the foreign deserved accounts by $25 billion.
In a statement signed by its Publicity Secretary, Alhaji Abubakar Danladi, the group, however, argued that the fall in Nigeria’s foreign reserves and the depreciation of the exchange rate are both related to what it called “exogenous global factors.”
He said such factors could not control by anyone.
Danladi said while Obasanjo boasted that he left $43.17 billion in reserves, he however failed to mention that his ability to do so was simply down to his luck with rising oil prices during his tenure.
The statement read, “As at May 1999 when Obasanjo became President, oil prices were $14.74 per barrel. By May 2007 when he left office, oil prices were $68.75 per barrel, representing an increase of more than 350 percent.
“This increase in oil prices enabled the Obasanjo administration to increase our foreign reserves to about $43.17billion in 2007.
“In contrast, President Jonathan assumed office in May 2011 when oil prices were $117.18 with Foreign Reserves at $32.1billion.
“Since mid-2014, global oil prices have been falling precipitously from a peak of $116 per barrel in January 2014 to about $58 per barrel in January 2015.
“Despite this significant fall in global prices coupled with rising incidence of oil bunkering and sabotage of oil facilities, the country has managed to maintain $34.4billion in Foreign Reserves, a level that is higher than the $32.1billion which President Jonathan met when he assumed office.”
Danladi argued that Nigeria is undergoing significant pressures from spillovers resulting from three factors that no single country has control over.
He listed the factors to include end of Quantitative Easing by the United States Federal Reserve which implied that the monthly injection of about $85billion into the global economy suddenly ended; the sustained fall in oil prices from a peak of $116 per barrel in January 2014 to about $58 per barrel in January 2015; and subsisting sanctions against Russia for its alleged role in the ongoing crisis in Ukraine.
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He said given Nigeria’s interrelatedness with the global economy as well as the nation’s dependence on crude proceeds, the economy had been affected like other economies.
Danladi listed some emerging market countries that have experienced a drop in their foreign reserves as a result of drop in global oil prices to include Chile, Czech Republic, Egypt, Ghana, Hungary, Kenya, Malaysia, Morocco and Russia among others.
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He added that while some countries like Russia has depleted their reserves by nearly $75billion during 2014, Nigeria lost $9.2billion in reserves from the reduction in the price of crude oil.
Danladi said although the average depreciation in exchange rate for the countries under consideration was about 11 percent, Nigeria’s exchange rate depreciated by eight percent.
