The World Bank Monday called on the federal government to delink its expenditures from oil price to ensure that its spending plan was not hampered by fluctuations in crude oil prices.
It suggested that the annual haggling over the appropriate benchmark price could be replaced favourably by a longer-term commitment.
The Bretton Woods institution noted in its new Nigeria Economic Report (NER), which was released yesterday in Abuja that delinking expenditure from oil price could “prevent overheating during times of high oil prices, while providing a reserve to protect the country in the event of a sharp oil price decline.
“It also cautioned that the country’s economic growth had not automatically translated into better economic and social welfare for Nigerians largely because “poverty reduction and job creation have not kept pace with population growth, implying social distress for an increasing number of Nigerians.”
Speaking to journalists at a briefing, World Bank lead economist and lead author of the report, John Litwack, said though it was impractical to severe government spending from oil, it had become necessary to at least, delink such expenditures from the price of oil in order to allow the system still function smoothly in the event of volatility in global oil index.
Various projects had been left uncompleted, often times as a result of disappointments in revenue expectation hinged upon the price of oil.
He said: “We are not saying government expenditure should be delinked from oil, given that 75 per cent of consolidated revenue in Nigeria comes from oil; there’s really no possibility of delinking expenditure from oil. But we are saying it should be delinked from oil prices- meaning when oil prices go up and down expenditures should remain smooth.”
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