“I increased Nigeria’s foreign exchange reserves from $3.7 billion to $45 billion and saved $25 billion from ECA” — Obasanjo

Former Nigerian President Olusegun Obasanjo explained that he increased the country’s foreign exchange reserves from $3.7 billion to $45 billion during his eight-year term.

In an interview with News Central aired today, Prime Minister Obasanjo revealed that he inherited a huge amount of debt upon taking office.

At that time, Nigeria‘s debt was $36 billion, debt service costs were $3.7 billion, and foreign exchange reserves were only $3.7 billion.

The former president explained that the national debt had been reduced from $36 billion to $3.5 billion by the end of his term thanks to his persistent advocacy for debt relief from international creditors.

At the same time, the country’s foreign exchange reserves increased from $3.7 billion to $45 billion during the same period.

“When I came in 1999, I was met with $3.7 billion in reserves. And as I said, we were spending $3.5 billion to service debt. We did. Eight years later I left with my debts forgiven.

“When I joined, our debt was $36 billion. When I left, paying off the debt and paying off what needed to be paid off, the amount of debt I had left was over $3.6 billion, or about $36 billion to about $3.5 billion to $3.6 billion. At the same time, reserves increased from $3.7 billion to $45 billion,” Obasanjo said.

In addition, former President Lee announced that he opened the Crude Oil Excess Account (ECA) to manage the budget surplus resulting from crude oil sales, leaving a total balance of $25 billion.

He explained that the budget during his administration was intentionally conservative, which enabled the ECA to save a surplus.

“At the same time, we had a surplus of crude oil, the amount between what we had budgeted to sell the crude and what we were actually selling. In general, we budgeted conservatively. There was about $25 billion. If we add this to our reserves, it comes to $70 billion,” Obasanjo said.

After a few years the funds run out.

Obasanjo further lamented the depletion of savings accumulated in the national treasury after leaving office.

He pointed out that 17 years later, from 2007 to 2024, Nigeria’s international debt was higher than it was in 1999 when his administration sought debt relief.

According to him, this situation is the result of financial mismanagement and lack of leadership and accountability in public services.

“The point is, I left in 2007, and today, just 17 years later, in 2024, that amount of money is gone. Not only that, all the money earned during that period disappeared.

“We owe more today than we did when I came to government in 1999. Why? Poor leadership, poor economic management, abundant corruption, wild corruption that is part of poor leadership.

“No results were given. If you do something wrong, there are consequences. I call this lack of consequences and impunity,” Obasanjo added.

What you need to know

In recent years, Nigeria has suffered a severe financial crisis due to poor economic management, soaring debt levels and rising debt service costs.

• These problems have strained the country’s reserves, tightened its foreign obligations, and depleted its treasury.
• By the second quarter of 2024, Nigeria’s debt had soared to 134.3 trillion yen, the highest in history. Meanwhile, data from the Central Bank of Nigeria (CBN) shows that the amount held in the Crude Oil Excess Account (ECA) is only $376,655. This reflects Nigeria’s outlook for declining revenues.
• Current CBN Governor Yemi Cardoso has made it a priority to rebuild a strong reserve base. To date, foreign exchange reserves have increased to $39 billion and are targeting $40 billion by the end of the year.
• However, this strategy came at a significant cost. That is, reducing interventions to stabilize the naira. The naira has fallen sharply to N1,700 per dollar, making it one of the weakest currencies in sub-Saharan Africa.