20110101
reuters

ABUJA (Reuters) - Nigeria has distributed $1 billion of its windfall savings from oil revenues to three tiers of government, in addition to a usual monthly allocation, the finance ministry said on Friday.

There is $300 million left in the account, into which it saves revenues from oil sold above a benchmark price, Yabawa Wabi, minister of state for finance, told reporters.

At the start of the current presidential term the account held $20 billion.

Analysts have grown increasingly concerned about the state of Nigeria's public finances in the run-up to presidential, parliamentary and state governorship elections next April.

Wabi said the money from the crude account would be used to fund capital projects and was not for election costs.

"We got approval from the National Economic Council and Mr President to share $1 billion from the excess crude account to the three tiers of government because the excess crude account is a financing item of the 2010 budget," Wabi said.

Despite higher oil prices and output, Nigeria's foreign reserves of $33 billion were down almost a quarter on a year ago at the start of December and its budget deficit is expected to widen to 6.1 percent this year.

In October, ratings agency Fitch lowered Nigeria's sovereign credit outlook to negative from stable, citing the depletion of its reserves as a contributing factor.

Nigeria distributes revenues from federal account to the three tiers of government on a monthly basis.

The distributions have a major impact on liquidity in sub-Saharan Africa's second-biggest economy and can trigger shifts in bond yields and interbank rates.