05 January 2015, Lagos – As the global price of crude oil continues to fall in the international market, the final benchmark on which the 2015 budget will be predicated will now be decided by the National Assembly.
Making this disclosure to THISDAY on the telephone, Senate Committee Chairman on Finance, Senator Ahmed Makarfi, laid to rest assumptions in some quarters that the federal government might be left with no option than to further review downward the proposed $65 oil benchmark it submitted last December.
According to Makarfi, since the budget had eventually been submitted to the National Assembly by the executive, it is now the responsibility of the federal legislature to decide whether it will approve the oil benchmark as submitted by the government or fix a new one.
The federal government had proposed $78 oil benchmark in the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Policy (FSP) it first submitted to the National Assembly in September last year.
But following the dwindling oil price in the international market, the National Assembly returned the document to the executive, describing the proposed benchmark as unrealistic and therefore advised the federal government to propose a fresh one bearing in mind the falling oil price.
Acting on the advice, the executive reduced the benchmark from $78 to $73 as contained in the second MTEF it re-submitted to the National Assembly in November.
But this reduction notwithstanding, the federal government had to further review downward the benchmark from $73 to $65 as contained in another MTEF it again submitted to National Assembly on December 2.
However, after the latest review, oil price slumped further below the $65 newly proposed benchmark. But the optimistic federal government said it would not review the benchmark further downward with the hope that oil price will hover between $65 and $70 in 2015.
But the situation has further worsened since then, resulting in the fall of oil price to as low as $53, prompting questions on whether the government will again withdraw the MTEF along with the 2015 budget it laid before the National Assembly on December 17, 2014.
But Makarfi put the record straight at the weekend, explaining that since the budget had already been handed to the National Assembly, the question of withdrawing it for further adjustment will not arise.
Instead, he said it is now the business of the National Assembly to decide on whether to approve the benchmark as submitted by the federal government or reduce it in observance of the persistent fall of oil price in the global market.
“It’s already with us. Therefore, National Assembly can decide anything on it. It can decide to retain the proposal or approve lower benchmark,” Makarfi said.
The 2015 budget laid before both chambers of the National Assembly on December 17, 2014 by the Co-ordinating Minister for the Economy and Finance Minister, Dr. Ngozi Okonjo-Iweala, comprised N4.357 trillion proposal for the 2015 fiscal year and an exchange of N165 to one dollar.
It also consisted of N2.622 trillion recurrent expenditure, N627 billion capital expenditure and N3.602 trillion revenue target in 2015.
– This Day