The Minister of Finance and Budget Planning, Zainab Ahmed, has disclosed that the Federal Government would review the 2020 Budget and make some adjustment as Coronavirus outbreak impacts crude oil revenues globally. She said the drop in oil revenue has the government worried.
According to her, the Federal Government would begin a mid-term review of the budget soon to determine the way forward. Ahmed disclosed this during the Federal Executive Council meeting in Abuja, which was chaired by President Muhammadu Buhari.
Ahmed further stated that “We are concerned about the current drop in oil price because it’s now below our budget. We will do a mid-term review, and if the impact is so much, we will need to do an adjustment in the budget, working together with the National Assembly.”
The adjustment was considered because the budget has oil benchmark of $57 per barrel, but as of Wednesday, the Brent Crude oil price hovered around $53 per barrel, and as at the time the N10.59 trillion budget was signed into law in December last year, it was $60 per barrel. And with coronavirus infection piling pressure on the market, another decline is expected.
The Coronavirus pandemic continues to spread throughout the world whilst grounding some economies (like China) to a halt. Nigeria confirmed its first case on February 28, 2020, making this the third reported case in Africa after the ones reported in Egypt and Algeria.
There’s a saving grace: With about $4 already lost, Ahmed said the loss could be recovered if daily oil production rises above the budgeted two million barrels.
“I am glad to inform you that our oil production as of today is two million barrels per day and at times slightly higher like 2.1 million. That in its self will be a cushioning effect for us in the current oil price.”
Although Nairametrics had reported that the decline in Brent Crude had also intensified speculation that the Organisation of Petroleum Exporting Countries (OPEC) and its allies might have no choice but to quickly reach a decision on a new output cut that would support oil prices.
Ahmed also commented on the revised sum of $2.5 billion for the Ajaokuta-Kaduna-Kano gas pipeline project, which she said would ensure job creation and increase in revenue to the government. The amount was revised downward from the initial $2.89 billion proposed in 2017.