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FG reduces 2020 budget, adjusts oil benchmark [Update]

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The Federal government has sent a new budget proposal to the National Assembly for consideration in view of global economic realities as a result of the outbreak and spread of COVID- 19.

According to the Federal government, the proposed Amended Budget will provide for the COVID-19 Crisis Intervention Fund and other adjustments required due to the decline in international oil prices.

The new proposal, which is being considered by the leadership of the National Assembly,  reduced the 2020 estimate from N10.594 trillion to N10.276 trillion, the oil benchmark from 57 dollars per barrel to 30 dollars per barrel.

Also, the oil production volume was reduced from 2.17 million barrel to 1.70 million barrel and the exchange rate increased from N305 to a dollar to N360 to a dollar.

In a document signed by the Honourable Minister of Finance, Budget and National Planning, Mrs. Zainab Shamsuna Ahmed titled “AMENDMENT OF 2020 APPROPRIATION ACT”, the Federal Government said that the 2020 Appropriation Act was based on certain fiscal assumptions, which it was compelled to revisit

This, it said, is given the emerging economic realities as specifically, projected Oil Revenues have been significantly affected.

Dated Brent Oil Prices fell to as low as US$19.125/barrel (as at Friday 3rd April 2020) as compared with the 2020 Budget Benchmark of US$57/barrel.

Further, Oil production in 2020 year-to-date is 2.0mbpd as compared with the 2020 Budget’s projection of 2.18mbpd.

Mrs. Shamsuna Ahmed stated:

“We are therefore revising the benchmark oil price for 2020 to US$30/barrel and oil production to 1.7mbpd.

“We have similarly had to adjust downwards our Non-Oil Revenue projections including various tax and customs receipts, as well as proceeds of privatisation exercises.

“In this regard, the Budget Office is currently working on a revised 2020 – 2022 Medium-Term Expenditure Framework / Fiscal Strategy Paper (‘MTEF/FSP’) as well as an Amendment to the 2020 Appropriation Act.

‘We have also commenced engagements with the Leadership and key Committees of the National Assembly to discuss our plans, such that once the Executive’s 2020 Amendment Budget is completed, we shall expeditiously seek the requisite Presidential and Legislative approvals.”

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