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THE Federal Government has announced the plan to review the 2020 budget as oil prices and revenue shrink further due to the negative impact of the coronavirus.
Minister of Finance and Budget Planning, Zainab Ahmed said the Federal Government intends to review Nigeria’s 2020 budget as a result of the current nosediving oil prices at the international market.
Global oil prices have had a steady decline which is attributed to the growing spread of the Coronavirus epidemic.
Brent crude price which is the benchmark for Nigeria’s crude price is down by 22.5 per cent to date.
It will be recalled that the 2020 budget was bench-marked on an oil price assumption of $57 per barrel and oil production of 2.18m barrel per day.
According to the 2020 budget document, crude oil sales were expected to contribute 35 per cent of the Federal Government’s total revenue.
“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,” Ahmed said.
“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,” Ahmed added.
Also, the Federal Government had declared its plan in February 2020 to issue a $3.3 billion euro bond where $2.8 billion is earmarked as external financing for the 2020 budget
According to CSL research team, an economic and financial analysis institution, the easiest alternative for the Federal Government would be to increase the planned debt finance raise via Eurobonds.
“We think the low-interest-rate environment would help the Federal Government raise cheap debt,” the team said.
Reports from Organization of the Petroleum Exporting Countries (OPEC) have revealed that oil traders are struggling to sell oil from West Africa (Nigeria and Angola) as European and Chinese refiners are cutting demand due to tight margins and lower economic activity.
According to these reports, 70 per cent of April futures cargoes from Angola and Nigeria are yet to find buyers.
This also showed that millions of barrels to be exported in March remain unsold.