$57 crude oil price benchmark no longer sustainable, Finance Minister says

Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed

The Minister of Finance, Zainab Ahmed has said that the $57 crude oil price benchmark approved in the 2020 budget is no longer sustainable.

She made this statement at a meeting between herself and the Leadership of the National Assembly on Thursday, as they tried to amend the N10.59 trillion 2020 budget passed by the National Assembly in December last year.

The meeting which had in attendance principal officers from both chambers was presided over by the President of the Senate, Ahmad Lawan, and the Speaker of the House of Representatives, Femi Gbajabiamila.

While Gbajabiamila worried about Nigeria's debt profile, Ahmed stressed the need to reallocate resources in the 2020 budget as the reality of life after COVID-19 begins to set in.

Ahmed's words: "It is necessary to reallocate resources in the 2020 budget, to ensure the effective implementation of required emergency measures, and mitigate the negative socioeconomic effects of the COVID-19 pandemic.”

She added that in line with the global economic outlook and relevant domestic considerations, the assumptions underpinning the 2020-2022 Medium Term Expenditure Framework and 2020 Budget was revised to slash crude oil benchmark price from US$57 per barrel to US$25 per barrel and reduce crude oil production benchmark from 2.18 million barrels per day to 1.9 mbpd.

The Minister also said that the federal government have adjusted the budget exchange rate to N360/US$1; and reduced the upfront fiscal deductions by the Nigerian National Petroleum Corporation for mandated Oil and Gas sector expenditures by 65% from N1.223 trillion to N424 billion.

She disclosed that the amount available for funding the budget is now estimated at N5.548 trillion, down from N8.419 trillion, a revised revenue estimate which is 34% (N2.87 trillion) lower.

On the provision of N500 billion for the COVID-19 Intervention Fund, the Finance Minister in her presentation explained that N263.63 billion will be sourced from FG’s Special Accounts, N186.37 billion from Federation Special Accounts & the balance of N50 billion expected as donations.