Nigeria sets $42.5pb oil benchmark for 2017 budget, with ambitious  output of 2.2mbp

The Federal Government has set an ambitious $42.5 per barrel and 2.2million barrel per day production of crude oil as assumptions for the 2017 budget, despite the dip in global oil prices.

As part of key assumptions on oil price and production for the 2017 to 2019 Medium Term Framework (MTEF), the government also set $45pb and $50pb for 2018 and 2019 respectively . It also projects an oil production
benchmark of 2.3 million barrels per day for 2018, and 2.4 million for the 2019 financial year.

This was disclosed by Nigeria’s Minister of Budget and National Planning, Udoma Udoma, during a presentation at a forum with Civil Society Organisations in Nigeria to commence discussions on the
2017-2019 Medium Term Expenditure Framework (MTEF), at the Presidential Villa, Abuja, Monday.

Exchange rate is assumed at N290/$1 consecutively for the three years in focus, the minister said, while the Nominal Oil Gross Domestic Product (GDP) is set at N7,775bn for 2017, N8,997bn for 2018 and
N10,885bn for 2019.

Nigeria, an OPEC member, has been hit by a series of attacks on oil and gas installation in the Niger Delta region of the country since January. This has largely reduced oil production,from 2.2 million barrels per day at the beginning of the year, by about 700,000 bpd. Nigeria relies on crude sales for about 70 percent of its revenue. Nigeria’s 2016 budget currently assumes oil production of 2.2 million barrels per day at $38 dollars per barrel.

Inflation rate may not drop to a single digit as government assumes 12.92percent, 11.88percent and 12.57percent respectively for the three years as government assumes that population would be constant at 3.2
percent.

The GDP growth of 0.35% which was projected for 2016 is projected to increase to 4.04% in 2019, averaging 3.77% during the MTEF period.

The Government expects that growth within the three year period would be largely driven by the non-oil sector as government intends to pursue export-led growth and improved tax collection.

Company Income Tax is projected to increase from N1.788trillion in 2016 to over N1.86trillion in 2017 and beyond while Value Added Tax collection and receipt is expected to increase by about 42.4percent in 2017. Customs collections are projected to moderate in 2017 before picking up outer years.

The minister said as part of fiscal strategies for the three years, the government was building on the framework of the 2016-2020 Medium Term Development Plan and Strategic Implementation plan for the 2016 budget. “It is designed to reflate the economy out of recession to a sustainable and inclusive growth path,” he said adding that “for 2017-2019 we want to do what we are doing now, but to do them better.

The government, he said intends to extensively engage with the private sector to explain its policies and establish what other bottlenecks “we need to remove to stimulate investment in Nigeria. We would take advantage of the opportunities to invest in production, agriculture, solid minerals, manufacturing as well as generating Foreign Exchange by Exports of Goods and Services.

The Highlight of the forum was a question and answer session which allowed members of the CSOs to make observations in respect of the assumptions.

Eze Onyekpere, Lead Director of the Centre for Social Justice in a chat with our correspondent noted that the revenue and expenditure framework, Debt Consolidated statement and the statement of contingent liabilities were missing from the minister’s presentation. “ This is just to consult and I hope that by the time we come back to them, all the sectors, components of the civil society and the organised private sector, they will have the  opportunity to improve on what they are doing.

Some members of the CSOs raised concerns about government incessant granting of waivers, stating that this continues to cost the government a huge loss of revenue.

Udoma who said his ministry was working at submitting the 2017 budget to the National Assembly by October this year, said the government plans to return to a January-December fiscal year starting with the MTEF.