Budget Presentation: Nigeria Insists On $65 Benchmark Amid Declining Oil Prices

December 17, 2014 Niyi Aderibigbe Business, Finance/Money

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VENTURES AFRICA – Nigeria will today present its 2015 budget proposal of N4.36 trillion ($23.9 billion) to the country’s National Assembly amid falling oil prices and a weaker naira. The budget will be presented by Dr Ngozi Okonjo-Iweala, the country’s Finance Minister and Coordinating Minister of the economy.
A letter sent to both the Senate and the House of Representatives which was read on the floor of the two chambers confirmed that the oil benchmark had been revised again from $73 per barrel to $65 per barrel. It had earlier been revised from $78. The price of OPEC basket of twelve crudes, which include Nigeria’s Bonny Light, stood at $57.92 per barrel on Monday.
According to the revised budget estimates, N627.16 billion will be spent on capital expenditure which includes N380.70 billion for the Ministries, Departments and agencies; N144.42 billion will be capital expenditure in statutory transfers and N102.03 billion for
the Subsidy Re-investment Empowerment Programme (SURE-P).
N2.62 trillion was earmarked for the recurrent expenditure which also includes personnel costs for MDAs that stands at N1.801 trillion, Overheads, N216.56 billion, pensions N228.81 billion and N376.05 billion budgeted for other service wide votes. N894.61 billion will be used to service domestic debts, while N48.39 billion will be for foreign debt.
President Jonathan had earlier in October, presented to the National Assembly a budget proposal of N4.817 trillion with the oil benchmark put at $78 per barrel. It was later cut down to N4.7 trillion with the benchmark at $73 per barrel, following the continued decline in global oil prices. The President has now for the third time revised the oil benchmark to $65 per barrel with the total budget size of N4.4 trillion.
The budget, going by the Medium Term Expenditure Framework (MTEF) and the Fiscal Strategic Paper (FSP), was also predicated on the production of 2.2782 million barrels per day (mbpd) for 2015, 2.3271 mbpd and 2.4067 mbpd for 2016 and 2017 respectively.
“Given further developments in the international oil market which have necessitated further revisions, amendments have been made to some parameters as well as to some fiscal estimates in the MTEF,” Nigeria’s President Jonathan wrote.
“I hereby forward copies of the revised 2015-2017 MTEF for the kind consideration of the Distinguished members of the Senate and hope that it will be considered and approved expeditiously in order to bring 2015 Federal Government of Nigeria budget preparation process to a quick closure.”