FG benchmarks 2017 budget against $42.5/barrel for oil, 290/$1 for naira

The federal government has unveiled the key benchmarks for the 2017 budget, pegging oil price at $42.5 per barrel.

Udo Udoma, minister of budget and national planning, unveiled the government’s plan pn Monday at medium term fiscal framework public consultative forum with civil society organisations (CSOs) and the organised private sector.

Udoma revealed that the federal government expects oil output to move up to 2.2 million barrels per day in 2017, rising to 2.3 million and 2.4 million in 2018 and 2019 respectively.

The government also expects that oil prices would rise to $45 in 2018 and $50 in 2019.

Unlike the Central Bank of Nigeria (CBN), Udoma believes the naira would settle at 290 against the dollar in 2017.

The CBN had initially said, in a letter to President Muhammadu Buhari, that it was “reasonably optimistic” that the naira would settle at N250 to a single dollar.

On 2016 budget, Udoma said the federal government had spent N2.1 trillion in the past two months, with N598.63 billion going to service existing debts and N331.58 billion on capital expenditure.

Company income tax (CIT) is projected at N1.788 trillion in 2016, and expected to rise to N1.86 trillion in 2017.

Udoma told the CSOs that the nation’s value added tax (VAT) is also expected to grow to 42.4 percent in 2017 as states ensure active generation of internal revenue.

He said non-oil revenue will be the game changer for the Buhari administration, urging the private sector to work with the government to deliver the much-needed change.

He explained that as part of fiscal strategies for the three years, the government was building on the framework of the 2016-2020 medium term development plan and strategic implementation plan for the 2016 budget.

“It is designed to reflate the economy out of recession to a ‎sustainable and inclusive growth path. For 2017-2019, we want to do what we are doing now, but to do them better,” he said.

“‎The focus of the 2017 budget is to removal all bottlenecks, to increase investment because we need major private sector investment to stimulate the economy.

“So all the things we are doing, the infrastructure, the rail, the roads, the airports is all to create an environment that will stimulate private sector investment. We want the private sector to invest in agriculture, solid minerals, manufacturing.‎ ‎So that is the focus. And we are still consulting.”

As at Monday afternoon, when Udomamade his presentation, Brent crude went $44.80 per barrel, while the naira was trading well above 300 to the greenback.

The 2016 budget was set at oil price of $38 per barrel, while naira was put at 197 to the dollar.