Nigeria to spend oil cash reserve

By Caroline Duffield
BBC News, Lagos

The Niger Delta region is rich in oil and provides large revenues

Nigeria's top economic body, the National Economic Council, has approved a government decision to spend $2bn (£1.25bn) from its oil windfall fund.

The fund was set up as a way to protect Nigeria's economy from unpredictable movements in the oil price.

The Nigerian government says it will take money from the fund for an economic stimulus package.

Economists fear the move will leave the country vulnerable if recovery in the global economy suffers a setback.

Spending fears

The government wants to tap into the fund, which currently holds about $9bn, to stimulate the economy.

Nigeria depends heavily on oil exports, and the savings fund is there to shelter the economy if the oil price falls.

But there is criticism over how it plans to spend the money.

Economic stimulus packages in other countries have targeted infrastructure projects, job creation, and tax cuts for small businesses.

Nigeria's government says it will spend half the cash on clearing the debts of federal government contractors.

The rest of the money is to be handed out to local government - to states and local authorities. Many of them have records of serious corruption and financial mismanagement.

Economists - even some advising the government - are warning that the plan is not focussed enough to make an impact.