Nigeria: Fiscal Commission wants oil benchmark lowered to $60

Fiscal Responsibility Commission21 November 2014, Abuja – $60 per barrel is a more realistic budget benchmark to be adopted by the federal government, the Fiscal Responsibility Commission (FRC) has said.

Chairman of FRC, Barr Victor Muruako made the proposal at a press briefing on the sliding oil prices yesterday.

Muruako said given the fact that there may be no immediate end in sight to the oil price slump, there is the need for federal government to take much lower and conservative oil bench-mark price of $60 per barrel.

The FRC boss argued that it is time the government revisited the use of average figures of international oil price to determine the benchmark.

He said benchmark price should be the difference between the forecast average international price of oil and the predetermined savings into Excess crude account (ECA).

He condemned application by the states through the Federal Account Allocation Committee to withdraw $2 billion from the ECA.

He said: “The projection is that 2015 would be gloomier than 2014, the wise thing to do would not be to rush into our savings, we must do more to diffuse the pressure.”

FRC advised that states should explore other avenues rather than rush to the center every other time.

“We are operating one economy so it will be unfair for the states and local government to carry on as if they exist independently”, he said.

The FRC also cautioned banks to exercise restrains in further lending to states noting that consideration should be given to debt limit.

The chairman further said: “Banks should take cognizance of the Fiscal Responsibility Act and know what becomes of any loan acceded in contravention of the act”.

Muruako stressed that if the provisions of the FRA act 2007 had been complied with, Nigeria might have saved enough for rainy day.

He said oil price slump has more than anything else emphasized the need for prudence, adding that greater fiscal responsibility will make all the difference.
*Sunday Michael Ogwu – Daily Trust

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