“Each dollar slump in Oil price cost Nigeria N20 Billion daily”
The Nigerian economy is swinging down with the oil market performance after OPEC+ failed supply cut discussion.
Nigeria plans two million barrels of oil per day, which means a dollar slump would cost as much as N20.196 billion at official exchange rate.
Oil prices nosedived further as demand for West African oil dropped from China slow demand.
This, couple with the Organisation of the Petroleum Exporting Countries , OPEC+, no supply cut decision at the last talk with members pushed prices down.
Some sizeable cargoes of Nigeria’s oil have not been purchased by China as demand slowed down.
Currently, global oil price benchmark has dropped to $31.02 a barrel, the lowest since 1991, according to a report.
The nation’s budget deficit is already large enough, couple with debt service cost which thus placed heavy claims on entire spending plan.
Meanwhile, with $57 oil price per barrel assumption used to prepared budget 2020, every dollar drops reduce government revenue.
Brent perched at $45 per barrel at the weekend as analysts say the wider the break out, the higher the risk for the economy.
This will threaten the economic performance which often thrive on receipts from oil export.
Analysts said as result declining revenue, government would struggle to meet funds require to achieve budgeted expenditure.
Unfortunately, it is always difficult for FG to miss on recurrent expenditure as it sends bad signal faster, MarketForces gathered.
Capital expenditure is likely to suffer setback, but with ramping up capital formation program of the government, the nation’s debt stock is expected to provide a support.
In the recent time, the 9th National Assembly approved $22.7 billion debt proposal for capital expenditure.
The proposal which seeks to finance infrastructure is expected to raise debt level to all time high.
But FG remains resilient as cost of debt is outside its worries, not in the immediate as analysts put it.
Declining revenue would reverberate through government expenditure program for 2020.
This pose threat to gross domestic product performance as non-oil revenue contribution to larger purse remains largely low.
Goldman Sachs stated in its recent report warned that oil price could slump to as low as $20 a barrel.
With this in mind, the nation’s economy more likely to slip down the economic cycle, as programs to reflate performance is lacking.
“Each dollar slump in Oil price cost Nigeria N20 Billion daily”
