12 March 2014, Abuja – Dr Uche Uwaleke, an associate Professor of Finance, Nassarawa State University, said the reduction of oil price benchmark by the National Assembly would aid the implementation of the 2015 budget.Uwaleke said this in an interview in Abuja on Thursday.
He said the reduction of the oil price benchmark reflected a careful approach to the implementation of the budget.
It would be recalled that both the lower and upper chambers of the National Assembly had adopted different oil price benchmarks for the 2015 budget.
Both chambers of the National Assembly had pegged the price at 52 and 54 dollars per barrel respectively, against the initial 65 dollars proposed by the executive arm of government.
Uwaleke said adopting a higher oil benchmark for the 2015 budget would translate to lower budget deficit and by extension lower budget deficit to Gross Domestic Product (GDP) ratio.
He said a higher benchmark would also lead to less borrowing to finance the deficit.
He said that it was more beneficial to adopt a lower conservative benchmark given the mono-product nature of the economy.
Uwalake said the unpredictable nature of oil price in the international market and the country’s shrinking foreign reserves as well as weakening domestic currency were responsible for the low benchmark.
He said that the adoption of a lower benchmark, however, required conscious effort at increasing the Internally Generated Revenue (IGR) of the country.
Uwalake advocated for a decrease in the disproportionate share of recurrent expenditure for the achievement of the development expenditure estimates.