Minister of finance Dr. Chu Okongwu has said that the impact of the increase in oil price of $18 per barrel has not fully felt.
He said that this is due to a variety of reasons which include receipt lags. The minister was reacting to critics who accuse the federal government of not funding the Foreign Exchange Market adequately.
According to Dr. Okongwu, government attaches top priority to the funding f the foreign exchange market. The minister said that official funding of FEM is largely from oil receipts which according to him, witnessed a decline in the first half of 1987 to less than 70% of the level achieved in the corresponding period of 1986.
The minister further said that government has made its best endeavours to fund the foreign exchange market within the limits imposed by available resources.
Dr. Okongwu added emphatically that SAP would in all probability not have been introduced if Nigeria did not have a foreign exchange constraint in the first place. SAP he continued was intended to foster self reliance and less dependence on imported inputs.
At present the minister reminded FEM critics that thee exists other competing demands for foreign exchange. Such demands, he said include government transaction and debt service payments.
The minister further reminded FEM critics that apart from the fact that official funding should be tailored to resource availability and be consistent with the objectives of the SAP official FEM funding is not expected to be predominant forever.
He said that with the enhanced competitiveness of Nigerian export arising from the adjustment of the naira exchange rate the various export incentives schemes introduced by government which involve fiscal sacrifices and the generous 100% retention of export proceeds allowed its exporters, the government expects that private sector sources should play a more significant role than is currently the case, in the funding of the market.
According to the minister of the $432.2 million non-oil export between October 1986 – June 1987 only $269.75 was repatriated.
Informed financial sources believe that the balance of private sector foreign exchange earnings that should have gone into funding of FEM might have found its way into the paralled market.