How NOT to run a resource wealth fund

Nigeria gives us a textbook example of how NOT to run a save-for-a-rainy-day resource wealth fund:

Nigeria withdrew 87 billion naira ($564 million) from a fund created to save revenue from oil exports when prices are high, ThisDay newspaper reported, citing Oludare Osibote, the country’s acting Accountant-General.

The money will enable the federal, state and local governments to meet some of their expenditures following a drop in revenue earmarked for them in this year’s budget, the Lagos- based newspaper said.

First of all, this is not a rainy day:

Funds are placed into the so-called excess crude account when oil prices rise above $45 a barrel, and are used as a reserve when prices decline.

Compare that to current oil prices of around $70/bbl. But even more concerning is this:

The account now holds about $9 billion, down from $20 billion at the beginning of this year, according to the newspaper.

The fund has lost or had withdrawn half of its assets in the last nine months?? Even though equity markets are up and oil prices have barely dipped below (and mostly stayed well above) the $45/bbl threshold?? Something doesn't add up here.