Uche Usim, Abuja
In reaction to plummeted oil prices in the global market, the Federal Government has slashed the crude benchmark for 2020 budget to 20/barrel from $30/barrel. The figure shows a $37/barrel cut from the initial $57/barrel which the 2020 budget was benchmarked ab initio.
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed made the disclosure on Tuesday in a web conference to deliberate on the impacts of COVID-19 on the economy and how the government was tackling it.
According to her, Nigeria has had her fair share of the battery of COVID-19, stressing that the economy may contract by up to 3.4% this year.
With Nigerian oil vessels stranded on the international waters with no buyers, the Minister said all pending oil and gas projects will be “delivered much later than originally planned” due to upstream budget cuts.
She added: “We are in the process of an amendment that is bringing down the revenue indicator to $20 per barrel”.
On Nigeria debt service obligation, the Minister said talks were at advanced stages to push it to 2021 and beyond.
“It’s not debt forgiveness, it’s just rescheduling of our obligations,” she noted.
With scant details on talks with the lenders, the Minister reiterated that the Federal Government was channeling between 58% and 60% of her revenues to debt servicing.
However, as recession bell tolls, economic experts insist it was time for Nigeria to diversify the economy or perish.
They said the only way to avoid a collapsed nation was to urgently end the profligate culture in governance and diversify the economy, especially now that quarantines and lockdowns have put the global economy on ventilators.
Nigeria’s oil revenue nightmares were worsened by twin blight of COVID-19 and a dispute between Russia and Saudi Arabia that crashed oil prices to the lowest prices in decades.
Eze Onyekpere, Lead Director, Centre for Social Justice said; “We need to be looking inwards for strategies to grow our economy by boosting local production and service delivery which increases employment, corporate tax and reduces the pressure on the Naira. We must enforce the Buy-Made-in Nigeria policy. It should no longer be an option.