WHAT OIL PRICE SURGE WILL MEAN FOR BUDGET 2016

According to the budget presentation made by President Muhammadu Buhari on December 22, 2015, Nigeria is expecting a revenue of N820 billion from crude oil, at a price of $38 per barrel.

With current realities, Nigeria is expected to be earning an extra $2 on every barrel of crude sold.

At the budget benchmark of 2.2 million barrels per day, Nigeria should earn a surplus of $5.6 million (N1.1 billion) per day.

This would translate to N404.97 billion for the 2016 fiscal year.

At a $50 per barrel scenario, Nigeria would make an extra $12 per barrel, translating to N1.9 trillion in oil revenue surplus.

With a budget deficit, N2.2 trillion, a $40 or $50 per barrel scenario, would reduce a sizeable amount of Nigeria’s budgetary deficit for 2016.

According to the International Monetary Fund (IMF), Nigeria’s debt-to-GDP ratio as of 2015 stood at 12 percent, compared with 57 percent for Angola and 48 percent for South Africa.

With borrowing in excess of N2 trillion in 2016, Nigeria would have a larger debt burden, but increase in crude oil prices will reduce the debt-to-GDP ratio of Africa’s largest economy.

It is worthy of note that the rise in crude oil prices may not automatically be funnelled into budget 2016, as the surpluses could be directed to Nigeria’s excess crude account (ECA), maintaining deficit at its current levels.



https://www.thecable.ng/.Vt7jaL0paOw.facebook

if the oil price barrel gets to $50 we would be able to fund the budget, this revelation brings one question to my mind, when oil was above $100 and our budget was just 3trillion naira. where did all the revenue accrued spent? If with just $50 we can fund a budget of over 5 trillion naira! some people will still come online to type media trial while your heroes have spent the money of your unborn granchildren

Ok

dondo83:


WHAT OIL PRICE SURGE WILL MEAN FOR BUDGET 2016

According to the budget presentation made by President Muhammadu Buhari on December 22, 2015, Nigeria is expecting a revenue of N820 billion from crude oil, at a price of $38 per barrel.

With current realities, Nigeria is expected to be earning an extra $2 on every barrel of crude sold.

At the budget benchmark of 2.2 million barrels per day, Nigeria should earn a surplus of $5.6 million (N1.1 billion) per day.

This would translate to N404.97 billion for the 2016 fiscal year.

At a $50 per barrel scenario, Nigeria would make an extra $12 per barrel, translating to N1.9 trillion in oil revenue surplus.

With a budget deficit, N2.2 trillion, a $40 or $50 per barrel scenario, would reduce a sizeable amount of Nigeria’s budgetary deficit for 2016.

According to the International Monetary Fund (IMF), Nigeria’s debt-to-GDP ratio as of 2015 stood at 12 percent, compared with 57 percent for Angola and 48 percent for South Africa.

With borrowing in excess of N2 trillion in 2016, Nigeria would have a larger debt burden, but increase in crude oil prices will reduce the debt-to-GDP ratio of Africa’s largest economy.

It is worthy of note that the rise in crude oil prices may not automatically be funnelled into budget 2016, as the surpluses could be directed to Nigeria’s excess crude account (ECA), maintaining deficit at its current levels.



https://www.thecable.ng/.Vt7jaL0paOw.facebook

Making an extra $12 per barrel at 2.2million barrels/day doesn't directly translate to N1.9trillion for the FG. Firstly, there is typically a 60-40 arrangement between Nigeria and the oil companies. Secondly, the 60% share of the FG is shared between 3 tiers of government with the FG actually taking only 55% while states and LGAs take the rest. So basically, only about 25% of that N1.9trillion rightfully belongs to the FG. Sad init?

T is not a winuation like as you think.an increase in oil price means increase in your price of fuel landing and associated costs(with 86.5 once again runs into another subsidy regime).

baralatie:
T is not a winuation like as you think.an increase in oil price means increase in your price of fuel landing and associated costs(with 86.5 once again runs into another subsidy regime).

subsidy is a different topic entirely, the point im making here is that with the increase in oil price we might not even need to borrow for the deficit

dondo83:


subsidy is a different topic entirely, the point im making here is that with the increase in oil price we might not even need to borrow for the deficit

You will borrow one way or another

baralatie:

You will borrow one way or another

that is a vague statement... one way or the other . when the oil price was high did yarudua or gej borrowed? The answer is no.. The reason we are borrowing again now is because we squandered the excess money coming in then. If we can get $50 per barrell upwards we dont need to borrow a dime

The positive effect I'm looking forward to is the funneling of foreign exchange into our foreign reserves, which will ease the pressure on, and catalyze the recovery of the Naira.