Fiscal plan based on $38 oil price benchmark
RISING from its second meeting since it was constituted, the Federal
Executive Council (FEC) yesterday announced an approval of an estimated
budget of N 6 trillion for the 2016 fiscal year, which is about N1
trillion more than the 2015 budget. The council also said it was working
on a $38 crude oil price benchmark as well as a 2.2 million barrels a
day oil production.
Briefing State House correspondents after the meeting which lasted
more than three hours, the Budget and National Planning Minister, Sen. Udoma
Udo Udoma, said the capital expenditure would take priority over
recurrent vote in the new administration’s change agenda, noting that
the government was projecting 30 percent capital expenditure as against
the current 15 percent.
Flanked by the Minister of State in the ministry, Mrs. Zainab Ahmed
and his Information and Culture counterpart, Alhaji Lai Mohammed, Udoma
said the Federal Government was working very hard towards getting the
Petroleum Industry Bill (PIB) passed: “Today, Council approved the Medium Term Economic Framework, which sets
out the policies of government over the next years, it sets out the
fundamental economic underpinning of the budget.
“The highlights are as follows: we project and we are working with
$38 crude oil price, we consider that to be very conservative but
because of the uncertainty, we felt that we should start with a
conservative crude oil price.
“We are also working with 2.2 million barrels a day production, it is
achievable, particularly because with the passage of the Petroleum
Industry Bill (PIB) which we are working to achieve, we believe that,
that is a modest figure that we should be able to produce something
higher than that.
“And so next year, we are looking at an expansionist budget, we are
looking at a budget that will be N1 trillion more than last year, so we
are looking at a budget of about N6 trillion. Last year’s budget,
including the supplementary was about N 5 trillion, so we are looking at
a N 6 trillion budget.”
He disclosed that all the increases would be spent on capital
expenditure , because of infrastructure issues that the country has to
On funding of the budget, Udoma said the government would get funds
from two sources . First , by increasing non-oil revenue and getting
more we are looking at trying to get more money from government
The government will also look at keeping down recurrent budget, which
means we are looking at savings that we can make from overheads.
“We will look at the efficiency from our revenue collecting agencies
like the Federal Inland Revenue Service and Value Added Tax and then,
based on the difference, we may have to borrow.
“But the level of borrowing that we anticipate and we are projecting
will be well within the maximum that we allow, which is three percent of
the Gross Domestic Product(GDP), because we want a prudent budget, we
want a credible budget.”
On the exchange rate, he said: “We are working on the exchange rate
that the Central Bank of Nigeria has given us, that is the rate we are
Udoma, however, did not provide detailed answers as to whether the
current subsidy on petroleum products would be totally removed or
retained. He simply said: “We are looking into that.”