UPDATE 3-Nigeria oil savings more than double, risks remain

* Ngozi Okonjo-Iweala trying to improve fiscal discipline

* Cost of recurrent expenditure inching down

* Fuel subsidy checks save billions of naira

(Adds details, analyst reaction)

ABUJA, Dec 3 (Reuters) - Cost-cutting has helped restore

Nigeria's Excess Crude Account (ECA) to some $9 billion in oil

savings, or more than double what it was a year ago, Finance

Minister Ngozi Okonjo-Iweala said on Monday.

Okonjo-Iweala was addressing delegates in Abuja at the

annual Nigerian Economic Summit, whose themes include reducing

the high cost of governance in Africa's top oil producer.

Nigeria is Africa's second biggest economy and its sovereign

debt is closely watched by foreign investors, especially since

JP Morgan included it in its emerging market index in October.

Flush with oil cash, the country has been seen as a

relatively safe destination for frontier debt investors, but

poor fiscal management has dogged it for decades - something

Okonjo-Iweala has made her top priority to fix.

"Before you can even look at the centres of the economy and

trying to change them and create jobs, you must have

macro-economic stability," Okonjo-Iweala said. "We have

introduced a measure of fiscal discipline."

"The fact that (forex) reserves are climbing now is not a

miracle. It happened because of proper fiscal management. We

have about $9 billion in the excess crude account. Last year it

was $4 billion, so it's more than doubled," she added.

The figure is still lower than the $20 billion it had in it

in 2007, but this was reduced to $3 billion when Jonathan took

office in early 2011, despite a year of record high oil prices.

And some of it would have to be used to pay for the latest

round of Nigeria's costly fuel import subsidies, she said.

Economists have cautiously welcomed Nigeria's improved

savings level, but caution that there is nothing in place to

stop it being reversed, as in the past.

"There's been some modest accumulation of fiscal savings,

but put it in context: even $9.6 billion, as we estimate it, is

only 3.7 percent of GDP," said Standard Bank's Samir Gadio.

"Compared it with UAE (Emirates) or Saudi Arabia, where it's

65 percent. It may be improving but it's well behind the curve."

The Sovereign Wealth Fund (SWF) launched this year would in

theory help Nigeria better manage its oft squandered oil funds,

by putting them out of the reach of its political elites, but

powerful state governors who want more money to spend are

blocking attempts to transfer the ECA into the fund.

"Without the SWF there's no sustainable basis for savings.

The risk is that as we approach elections in 2015, the ECA could

be depleted quite rapidly," said Gadio.

DISPUTED BUDGET

The finance minister also faces a showdown in parliament

over the government's latest budget, with some lawmakers saying

too much money is being set aside as oil savings when the

country needs more spending on things like infrastructure.

President Goodluck Jonathan's 4.93 trillion naira ($31.35

billion) budget plan for 2013 assumes oil prices at $75 a barrel

oil prices, but many legislators want this inflated - especially

with prices now hovering around $112 a barrel.

Oil earnings over the benchmark price get deposited into the

ECA, which is used to save for future generations.

Critics say running Nigeria's government still saps too much

of the budget - Okonjo-Iweala said the share of such recurrent

expenditure had been reduced to 68.8 percent in next year's

budget, from its current 71.47 percent in this year's.

Investors and rating agencies have welcomed Okonjo-Iweala's

austerity drive, with Standard & Poor's the latest to upgrade

Nigeria's debt to BB-, with a stable outlook.

One major fiscal headache remains the motor fuel subsidy.

Jonathan attempted to scrap it in January, but a week of

strikes and protests forced him to partially reinstate it.

Since then, a parliamentary inquiry has uncovered

multi-billion dollar fraud in the subsidy's administration, and

the government has exposed subsidy claims to stronger checks.

Okonjo-Iweala said that 232.2 billion naira of claims had

been rejected so far. There is speculation Jonathan will try to

remove the subsidy - which many Nigerians see as the only

benefit they get from living in an oil-rich state - next year.

Speaking at a panel in the economic summit, Vice President

Namidi Sambo said it would depend on what Nigerians thought.

"We're a democracy. Our economic policies, however well

designed, have to be accepted by the public," he said. "I

believe Nigerians will come to see that deregulation is right."

($1 = 157.3500 naira)

(Additional reporting by Camillus Eboh; editing by Ron Askew)

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