Okonjo-Iweala pledges tighter Nigeria fiscal policy

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World Bank managing director Ngozi Okonjo-Iweala laid out her vision for the Nigerian economy yesterday, pledging she would create jobs and ensure the country “lives within its means” if approved as a cabinet minister.

President Goodluck Jonathan has asked Okonjo-Iweala, a respected former finance minister who helped negotiate debt relief in 2005, to return to her old position with broad powers over economic management, government sources have said.

She appeared before the Senate on Wednesday to be grilled by lawmakers over what she would do as a minister, part of the process of approving Jonathan’s cabinet nominees.
“I am really worried about the issue of making sure our budget is not eaten up by recurrent expenditure. How can we invest in capital if we’re spending all our money on recurrent expenditures,” Okonjo-Iweala told the hearing.
“Can we run a budget that is not negative? Absolutely. We can do it, we have done it. We have been able in the past.”

The high cost of government has been a major concern for economists and investors in sub-Saharan Africa’s second-biggest economy. Recurrent expenditure accounts for well over half of government spending despite poor public services.

Okonjo-Iweala also said she was concerned that Africa’s biggest oil and gas producer was seeing its foreign reserves fall despite high oil prices, although she said that was partly due to a policy of supporting the naira currency, a stance she would not seek to reverse in the immediate term.
“If we want to re-value the naira this may not be the time to think about it,” she said.
“I think we should wait until things are more stable, we are growing the economy, we are creating jobs, young people are working and the sectors we have are giving what they should.”

The World Bank said late on Tuesday that Okonjo-Iweala remained in her current position at the development lender and was in talks with Jonathan.

Jonathan was sworn in for his first full term on May 29 and his ministerial choices are being closely watched by Nigerians and foreign investors keen for a team capable of driving badly needed reforms.

He has already reappointed 12 ministers from the outgoing government to their old jobs, including oil minister Deziani Alison-Madueke, a move his critics saw as an uninspiring start.

The inclusion of Okonjo-Iweala in the cabinet could lend more weight to his reform ambitions.

She was praised as finance minister for fighting corruption and negotiating the cancellation of nearly two-thirds of Nigeria’s $30 billion Paris Club debt. She was suddenly reassigned by then-President Olusegun Obasanjo to foreign minister in 2006, a move that was never properly explained.

She was appointed to the World Bank, where she had previously worked for more than two decades, in October 2007.

Challenged about why she had left Nigeria to work for the World Bank, she defended her decision, saying she had given more than three years of dedicated service before circumstances changed.