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Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark - Politics - Nairaland

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Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by Omooba77: 11:53pm On Mar 10, 2020
John Ameh, Samuel Awoyinfa and ’Femi Asu

Amid tumbling prices of crude oil, the Federal Government is set to cut the country’s 2020 budget.

The President, Major General Muhammadu Buhari (retd.), will get a report on Tuesday (today) on what his regime can do to salvage the N10.59tn budget.

The budget review committee, which was set up by Buhari on Monday, is chaired by the Minister of Finance, Budget and Planning, Mrs Zainab Ahmed.

Its primary duty is to review the $57 oil benchmark for the budget and ultimately recommend an appropriate size, down from the current N10.59tn.

Other members are the Minister of State, Petroleum Resources, Mr Timipre Sylva; Governor of the Central Bank of Nigeria, Mr Godwin Emefiele; and the Group Managing Director of the Nigerian National Petroleum Corporation, Mr Mele Kyari.

The President had handed the assignment to the committee on Monday after he held a meeting at the Presidential Villa, Abuja, with the government officials.

Speaking with State House Correspondents after the meeting, Ahmed said the committee would determine the new benchmark for the budget.

She said, “Our mandate is to make a very quick assessment of the impact of this coronavirus on the economy, especially as it affects the crude oil price.

“We will be writing a report and briefing Mr President tomorrow (Tuesday) or Wednesday morning. After that, we will also have more substantial information for the press.

“It is very clear that we will have to revisit the crude oil benchmark price that we have of $57 per barrel. We have to revisit it and lower the price.”

She added, “Where it will be lowered (benchmark) is the subject of this committee. What the impact will be on that is that there will be reduced revenue to the budget as it will cut the size of the budget.

“The quantum of the cut is what we are supposed to assess as a committee.”

The Buhari regime gave its first hint on a possible cut of the budget after last week’s Federal Executive Council meeting.

The minster, when asked by reporters what the impact of coronavirus would be on the budget, replied, “We are really concerned as a government.”

Sylva spoke on the reported disagreement between the Organisation of Petroleum Exporting Countries and OPEC+ member states on how both sides would respond to the impact of coronavirus on oil prices.

He said it was not a matter Nigeria could handle unilaterally, but would be handled at the level of OPEC versus OPEC+ bodies.

Global oil prices have been unstable since January, worsening with the outbreak of coronavirus in China and its rapid spread to many countries.

In December 2019 when Buhari signed the 2020 budget, Nigeria’s Brent crude was well above $60 per barrel. But, it soon began a free fall since January, dropping below the budgeted $57.

Recall that in 2015, oil price crashed to as low as $27 per barrel, forcing the economy into recession. The economy later exited recession as oil prices climbed again.

The steep fall in crude oil prices on Monday stoked fears of fresh economic recession that Nigeria suffered in 2016 and has yet to recover from more than two years after a shaky exit.

The global oil benchmark, Brent crude, plummeted by as much as 31 per cent to $31.02 on Monday, its lowest since mid-February 2016, but recovered slightly to $36.29 per barrel as of 6.15pm Nigerian time.


Brent, against which Nigeria’s oil is priced, fell by over $4 to $45.72 per barrel last Friday following the failure of OPEC and its 10 allies, led by Russia, to broker a deal.

Russia refused to go along with a plan for deeper crude production cuts to tackle the coronavirus’ impact on global oil demand.

OPEC had on Thursday revealed a plan under which it would slash its production quotas by an additional 1 million barrels per day for the rest of the year, contingent on Russia and nine other non-OPEC allies agreeing to shrink theirs by 500,000 bpd.

Saudi Arabia, on Saturday, fired the first shot in an oil price war, moving to hike its oil output and offering deep discounts to customers in markets such as Asia, Europe and the US to entice refiners to use Saudi crude.

Economic experts, in separate interviews with one of our correspondents, said the sharp drop in oil prices amid the price war would have serious implications for the Nigerian economy.

The Managing Director, Financial Derivatives Company Limited, Mr Bismarck Rewane, said, “It has very huge implications for our economy. It is a national emergency.

“We are facing unprecedented difficulties. It is not what I want to talk about; it is something we have to think about and it is time for action. Actions have to be taken immediately.”

Rewane, who is a member of the Economic Advisory Council, said the nation’s entire macroeconomic strategy needed to be reset.

A former Director-General, West African Institute of Financial and Economic Management, Prof. Akpan Ekpo, said the oil slump would result in sharp declines in revenue, foreign exchange earnings and external reserves.

Ekpo said, “We need to rejig the budget for this year; the budget is no longer realistic. We need to strengthen our resolve to build an economy that is not dependent on oil. Everything now is in disarray.”

The Chief Executive Officer, Economic Associates, Dr Ayo Teriba, said the government should leverage its over $50bn equity investment in joint venture oil assets to raise funds.

He said the option should have been explored in 2016 when the country slipped into recession.

He said, “Are we at risk of another recession? Are we at risk of another devaluation? It depends on how long the low oil price regime lasts. This latest one is arising from an oil price war between Saudi Arabia and Russia.”

The Director-General, Lagos Chamber of Commerce and Industry, Dr Muda Yusuf, described the spread of coronavirus as a major threat to the nation’s economy.

Yusuf said many manufacturers and service providers in the country were already experiencing acute shortage of raw materials and intermediate inputs as a result of the virus outbreak.

The Director General, Nigeria Employers Consultative Association, Dr Timothy Olawale, said the fall in the global oil price called for concern.

He said the government must ensure that the country did not fall back into recession.
https://punchng.com/coronavirus-fg-to-cut-budget-seeks-new-oil-benchmark/amp

2 Likes

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by Omooba77: 12:10am On Mar 11, 2020
The whole world is entering recession

17 Likes 1 Share

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by socialmediaman: 12:18am On Mar 11, 2020
Cut your salaries and live like people from a poor country. The jumbo pay should be for infrastructure not individual compensation!

47 Likes 1 Share

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by princemillla(m): 1:42am On Mar 11, 2020
Who the budget help? Even in the surplus what do we get?

Abeg let's kiss the reality, nija Don cast

15 Likes 1 Share

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by Susu888(m): 2:27am On Mar 11, 2020
Hmmm ... body go hear am O embarassed
Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by idonhammer: 5:23am On Mar 11, 2020
The whole world is gradually entering into recession because of coronavirus. Odikwa egwu o

2 Likes 1 Share

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by ursullalinda(f): 5:24am On Mar 11, 2020
Start with the legislators......their jumbo salaries can solve half of our budget.......this is the 3rd month and no cure yet for this virus.....everything seems to be standing still.

15 Likes

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by ReubenE(m): 5:25am On Mar 11, 2020
I thought the economy has been diversified.
Aren't we already making billions of dollars from non oil exports?

28 Likes 1 Share

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by dbtt: 5:26am On Mar 11, 2020
This is what happens, when you base your fiscal source on oil .

The oil market is not stable.

From politics of dominantion from russia, Saudi , Iran, Us, to environmental agitations, the oil price will continue to fluctuate and will be at the whimps and caprices of others.

Nigeria ought to have something stable as fiscal source. Something they can control.

So sad,we are in this state.

The future scares me.

18 Likes 2 Shares

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by anonimi: 5:26am On Mar 11, 2020
socialmediaman:
Cut your salaries and live like people from a poor country. The jumbo pay should be for infrastructure not individual compensation!

Cut their pay, Yes!
For infrastructure, No!!
For education, health, subsidised SME loans for employment, Yes. Capital YES!!!


www.nairaland.com/attachments/2943664_wage_jpeg1488711c5349aed5f79f2e121e58b278



www.nairaland.com/attachments/2943662_payment_jpegc1c3e670f39cd4ba8a1a1978a794d236



www.nairaland.com/attachments/4284749_fbimg1474050978374_jpeg39ff755f5e96523b18d624dde1a019a0

8 Likes 1 Share

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by anonimi: 5:28am On Mar 11, 2020
dbtt:
This is what happens, when you base your fiscal source on oil .
The oil market is not stable.

grin cheesy

The barawo bubu of the Alliance of Past/Present Crooks, APC knew that since 2003.



www.nairaland.com/attachments/2015650_image_jpeg9f360c5ab7736510df54c882e9dbf188

8 Likes

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by bayelsaowei(m): 5:30am On Mar 11, 2020
Nonsense...

Niger delta oil kill FG and its longer throat for free money...this government promised to diversify the nigerian economy during the niger delta avenger saga.. alas because of no better way of thinking or providing sustainable solutions they reverted back to over dependence on oil and this is the result..

7 Likes

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by easyfem(m): 5:31am On Mar 11, 2020
its seem to me that this generation has missed it ....... seriously the only way out is revolution ....... im not even sure if prayer can wrk on the country coz GOD has given us all wat we need to survive as a country ... so u cant blame or pray for him to solve wat he has already b solve so we need revolution to solve it .............

4 Likes 1 Share

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by Esseite: 5:32am On Mar 11, 2020
If Nigeria had any iota of thinking, it would kickstart population control measures, its dwindling resources can no longer sustain its 200m population, talk more an increase.

4 Likes

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by Felixamos(m): 5:32am On Mar 11, 2020
princemillla:
Who the budget help? Even in the surplus what do we get?

Abeg let's kiss the reality, nija Don cast
Not just cast, naija is dead..
Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by bayelsaowei(m): 5:33am On Mar 11, 2020
easyfem:
its seem to me that this generation has missed it ....... seriously the only way out is revolution ....... im not even sure if prayer can wrk on the country coz GOD has given us all wat we need to survive as a country ... so u cant blame or pray for him to solve wat he has already b solve so we need revolution to solve it .............
prayer doesn't work in Nigeria because God has given us brains to manage critical situations like this but we dont use it..we go back to God over and over again to help us do simple things we ought to execute with our God given brains...

9 Likes

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by Bossontop(m): 5:33am On Mar 11, 2020
undecided
Instead of them to start decreasing thier "unjustifiable jumbo pay" (all d polithiefcians oo)

5 Likes

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by chatom143: 5:34am On Mar 11, 2020
The economic impact of Coronavirus outbreak on Nigeria economy would be greatly felt.
Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by ernie4life(m): 5:38am On Mar 11, 2020
Time for reality check, market is on a free fall, investors are already panicking, everyone is moving to dollar based investment and this is putting more pressure on naira.
Even real estate is no longer viable.

5 Likes 1 Share

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by kayusely70(m): 5:39am On Mar 11, 2020
A consequence of over-relying on a mono income
Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by Humblega(m): 5:39am On Mar 11, 2020
The right time to know a good coach is wen he has a battle to needs tactical changes .

Mr president and his team should look for means of working around.

Low oil price should not b anoda excuse for borrowing
Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by ayusco85(m): 5:39am On Mar 11, 2020
Suffering just entered gear 4. Brace up guys, perilous times lie ahead.

3 Likes

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by Bossontop(m): 5:42am On Mar 11, 2020
undecided
And awa mumu polithiefcians go still wan dey pay diasef fat fat salaries join....... Mtcheewww

1 Like

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by bigtt76(f): 5:46am On Mar 11, 2020
The better benchmark at $5 and strive to save the excess to avoid the unforeseen. Cut down on personnel costs, cut down NASS allowances and other cost of governance, stop unnecessary travels outside the country, restrict imports to just necessities.

Trust the fools there, they will end up benchmarking at $20 when they should have done this from the outset.



Omooba77:

https://punchng.com/coronavirus-fg-to-cut-budget-seeks-new-oil-benchmark/amp

1 Like

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by nextstep(m): 5:47am On Mar 11, 2020
They should not forget to triple the loan amounts while they're at it. And why haven't we heard the usual spins from Mr Lye?

3 Likes

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by Felixamos(m): 5:53am On Mar 11, 2020
Anybody still supporting this failed govt is worst than a fool...
Security: zero
Electricity: zero
Education: zero
Concern for the masses: zero
Good economic policy: zero


Audio Italian man: 100%
Snake swallowing money: 100%
Turning herdsmen to celebrities: 100%
Blinded and mad apc miscreants on nairaland: 100%
Rat's chasing the president out of aso rock: 100%
Making Nigeria a laughing stock to reasonable countries: 100%

Btw even if the said italian man is not audio, the uselessness of this govt, has given us more than enough reasons to doubt the news..

Nigeria is dead... Bury the damn thing and let new lives(countries) spring out...

3 Likes

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by Nobody: 5:54am On Mar 11, 2020
.. Where is mannabbqgrills?

Maybe his nairalanders hater have gotten hold of him


Manna wherever u dey, I pray God wey deliver Paul n Silas go deliver u

1 Like

Re: Coronavirus: FG To Cut Budget, Seeks New Oil Benchmark by omoiyamayor(m): 5:58am On Mar 11, 2020
Who be dis fine girl

1 Like

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