The Federal Government of Nigeria is considering a review of the 2020 budget in order to make plans for the drop in oil prices triggered by coronavirus outbreak globally, Mrs. Zainab Ahmed, the Minister of Finance/Budget Planning said on Wednesday.
According to the minister, the government was troubled by the fall in oil revenue and that a mid-term review of the budget was on the table.
Briefing newsmen after the Federal Executive Council meeting, the Minister said “we are concerned about the current drop in oil prices because it’s now below our budget.
“We are not taking any measure now until we have a reasonable period within which we make a review and then we may need to do an adjustment to the budget through working together with the National Assembly,” She said.
In December 2019, when President Buhari signed the 10.6 trillion 2020 budget, which was based on oil production of 2.18 million barrels per day, a price benchmark of $57 per barrel and a targeted earning of 2.64 trillion naira. Oil prices have been down more than 20 percent since the beginning of this year.
But oil prices have been falling since the beginning of this year. CNN reported that global oil demand had dropped since the outbreak of COVID-19 in China. To control the spread of the infection, businesses in China had to be closed for several weeks. Reuters reports that PetroChina, a top gas importer in China has declared force majeure on natural gas imports because of the disease outbreak. This declaration enables the company to suspend contractual obligations because of exceptional circumstances.
To control the price of global oil, OPEC is meeting on Thursday and Friday this week where it will be decided whether to cut oil production by countries in order prevent prices from falling further.
The West African Pilot News had analysed how COVID-19 outbreak in Asia and Europe affect oil prices and how Nigeria’s revenue could suffer. Crude oil export make-up between 50 to 60 percent of Nigeria’s income and 90 percent of its export. The continuous decline of oil prices had made the International Monetary Fund to cut Nigeria’s economic growth projection from 2 percent to 2.5 percent.
