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FG Cuts Budget Plans To $20 Per Barrel, As Economy Shrinks By 3.4%

BY LEVI JOHNSON

Finance Minister Zainab Ahmed said The Federal Government has cut its budget plans to assume a lower petroleum price of $20 per barrel, adding that the economy will shrink this year by 3.4 per cent.

She adduced the economic shrink of this year to the consequence of the outbreak of Coronavirus pandemic.

Ahmed stated this at a virtual session tagged Citizens dialogue session on government fiscal policy decisions in response to the fall in oil prices and the COVID-19 pandemic.

At the session, she said that the benchmark would again have to be revised down.

According to her, “we are in the process of an amendment that is bringing down the revenue indicator to $20 per barrel.”

She, however, cautioned that “budget revisions would need to be approved by lawmakers before being signed into law by the president.”

She also disclosed that the country’s oil and gas projects will be “delivered much later than originally planned” due to upstream budget cuts.

READ ALSO: Senate Halts Approval Of 5G Technology In Nigeria

With regards to Nigeria’s debt servicing obligations, the finance minister said, Nigeria is in talks to defer debt service obligations to “2021 and beyond”.

This is coming a week after the country swapped plans to borrow 850 billion nairas ($2.36 billion) from the domestic market instead of borrowing from the international markets to finance the budget.

According to her, “it’s not debt forgiveness, it’s just rescheduling of our obligations,” said Ahmed, with regards to talks with lenders.

She did not provide details of the lenders with whom talks were held. While lamenting that Nigeria was spending around 58% to 60% of revenues to service debt, Ahmed lamented that explained that that was why Nigeria approached the lenders.

 

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