Lagos — Nigeria’s 2020 budget will now run at $25 per barrel, more than half below the initially budgeted benchmark of $57 per barrel.
The revised 2020 national budget of N10.8 was passed by the National Assembly on June 11 after the approval of the Federal Executive Council, FEC, but was signed into law by President Muhammadu Buhari on Friday.
The adverse effect of the COVID-19 on the country’s economy had forced prices of its number one revenue earner, crude oil below expectations.
Now that it has been signed into law, all Ministries, Departments and Agencies, MDAs will be allocated 50% of their capital allocation by month-end.
The Oil benchmark was not the only item slashed, crude production was also reduced from 2.18 million to 1.94 million barrels per day, mbpd as disclosed by Zainab Ahmed, the Minister of Finance.
Part of the budget, N5.365 trillion will be funded by domestic and foreign borrowing while direct revenue funding will cover N5.158 trillion- the revised sum is just a difference of N71.5 billion compared to the previously approved budget.
Even though size of the budget was reduced, new expenditure previously not budgeted were added, to enable the country to adequately respond to the COVID-19 pandemic, the minister said.
While oil benchmark price for the 2021 fiscal year was put at $35, and $40 for 2022 and 2023, oil production was placed at 1.86 mbpd for 2021, 2.09 mbpd for 2022, and 2.38 mbpd for the 2023.
The exchange rate was set to remain at 360 naira per dollar.
Crude oil sales make up around 90% of foreign exchange earnings for Nigeria.