Crisis isn't here yet but Nigeria's prepared

LAGOS (AFP) - The credit crunch has not really hit Nigeria yet but the West African oil producer, already weakened by a fall in crude prices and output, is gearing up for it.
A few days ago the government’s economic team trooped into the Senate to go through all the possible worst-case scenarios and to deliver a double message: the economy is still stable but a tsunami could happen any time.
“The first question is: do we have a crisis here, and the response is no. Now are we sheltered from the global financial crisis? And the response is no, we are not,� warned Finance Minister Shamsudeen Usman.
After years of “wasting oil revenues�, to use the expression of the head of the International Monetary Fund Dominique Strauss-Kahn, who was in Nigeria briefly in February, the trend is now for sensible money management. One of the first measures, announced last week, was to cut the 2009 budget to reflect the drop in oil prices.
Nigeria, Africa’s most populous nation and the second largest exporter of crude, bases its budget on a benchmark crude oil price. Crude prices have more than halved in value since striking record highs above 147 dollars per barrel in July, slashing the revenues of oil producing countries.
“There has been a number of serious measures taken to reduce expenditure and improve efficiency,� Usman said after an extraordinary cabinet meeting in the administrative capital.
He said cabinet discussed next year’s budget in detail and it was being fine tuned before President Umaru Yar’Adua presents it to parliament within days. He gave no further details.
On Wednesday Oil Minister Odein Ajumogobia said the 2009 budget would be based on a “very conservative� 45 dollars per barrel, lower than the 59 dollar benchmark used as the basis for last year’s budget.
“We want to be able to meet our budgetary requirements for 2009. As a result of that, we have advocated a reduction in the benchmark which has been effected,� the minister told reporters. “We are realistic as to what the price will be. The benchmark is now 45 dollars per barrel which I think is very conservative,� he added.