FG ‘may review’ $38 oil benchmark for budget

Udo Udoma, minister for budget and national planning, says Nigeria may review the $38 oil price benchmark if crude oil prices fail to recover to $38 and above.

The minister, who defended his plans for the budget before a joint committee of the national assembly on Thursday, also said his team may review the budget as quickly as June – less than three months after expected date of passage.

“The benchmark of $38 per barrel of price of oil is not sacrosanct because of the subsisting global environment,” he said.

“If at mid-year there is no improvement, we will come back to you for mid-term review. The review may come as quickly as June this year.”

With Nigeria’s bonny light trading at $34.76 per barrel as at Wednesday, the country is about $3 short of budgetary allocation on every of the 2.2 million barrels expected to be pumped per day.

At the budget defence, Kemi Adeosun, minister of finance, also told the national assembly that a passage of the 2016 budget would translate into a stimulation of the country’s economy.

“The economy is slow right now and by the time we start paying contractors and others, the economy will pick up. We expect that from next year, our debt will reduce,” she was quoted by Reuters to have said.

“We have secured debts with Chinese Nexim Bank and the World Bank at very low interest rates. We are borrowing to finance critical sectors of the economy.”

The 2016 budget had a record deficit of N2.2 trillion as at the time of it presentation in December 2015, rising to a projected N3 trillion before passage, based on the price of crude on the global market.

Brent futures, the global benchmark for crude, were trading around $37 a barrel on Thursday, while the OPEC basket stood at $31.61.