Mkpoikana Udoma 14 January 2016, Sweetcrude, Port Harcourt – Nigeria’s 2016 budget as proposed by the Federal Government is “laudable” and “ambitious”, but is “unachievable,” according to the Trade Union Congress of Nigeria, TUC.
TUC, in its new year message for 2016, expressed concern about the nation’s history of non-performing budgets and the choice of benchmark crude oil price for the year’s budget.
Nigeria’s budget for this year, christened, “The budget of change,” puts the benchmark crude oil price at $38 per barrel, but TUC noted that the Organisation of the Petroleum Exporting Countries, OPEC, basket price, as at the end of 2015, stood at $32.14 per barrel, which is lower than the budget benchmark oil price.
Expressing further concern about oil prices, the Congress said: “More worrisome is that some analysts including the International Monetary Fund, IMF, have projected that crude oil will fall to $20 per barrel in 2016. Also Goldman Sachs insists that the fall in crude oil price will be sustained and that oil price will fall to $20 per barrel.
“Anyone who is a keen observer of the events that are shaping the crude oil price will recognise that we are in for a sustained low crude oil price regime. Accordingly, it is doubtful if the budgeted oil revenue of N820 billion will be realised in 2016.
“If the budgeted oil revenue is not realised, this will negatively impact on the 2016 budget performance”.
Giving impetus to TUC’s fears, the OPEC basket price had fallen to $27.38 as at last week while prices of major crude brands hit 12-year lows with Goldman Sachs saying more losses were expected.
For the week, Brent fell 10% to $33.55 a barrel, behind the 11% drop in the opening week of 2015, which was a record loss for oil in the first full trading week of any year. West Texas Intermediate, WTI, went as low as $32.10, its lowest since December 2003.
TUC also noted that the major challenge with budgets in Nigeria was poor implementation, adding that the history of budget performance in the country showed that “while the recurrent expenditure aspect of the budget usually witnessed over performance, the capital expenditure aspect is usually under achieved”.
This, the union said, called for careful plans by President Muhammadu Buhari government to ensure that the targeted N1.8 trillion capital expenditure was indeed achieved in 2016.
According to it, if this is done, it would be the first time in a long while that capital expenditure budget would be fully achieved in Nigeria.