Nigeria’s government has approved a 3-year spending plan, assuming a benchmark oil price of $42.50 per barrel in 2017 and production at 2.2 million barrels a day.
Minister of budget and national planning said shortly after the Federal Executive Council (FEC) meeting at the Presidential Villa, Abuja, on Wednesday that the budget projected on oil production and prices rising each year to 2019, and the naira recovering to settle at 290 per dollar.
“The highlights are that the government intends to intensify efforts in pursuing non-oil driven economy,” he said. “We’ll continue to spend money on roads, rail transport infrastructure, ports and so on.”
Nigeria’s economy has been devastated by low crude prices and attacks in the southern Niger Delta energy hub that have cut oil production from 2.2 million barrels per day to 1.5 million since January in the OPEC member state.
Udoman said that the projections for 2018 and 2019 were $45 and $50 a barrel and output of 2.3 million and 2.4 million, respectively.
He said that the government is assuming a rate of 290 naira per dollar. The currency closed at 305.50 on the official market on Wednesday and had hit a record low of 402 naira on the black market during the session. Currency forwards put the naira at 388 to the dollar in 12 months’ time.
Nigeria budgeted a record N6.06 trillion of expenditure this year, 2016, assuming oil production of 2.2 million barrels per day at a price of $38 a barrel.
But with low oil prices, the government has struggled to fund the budget. It is now seeking advisers to manage a $1-billion eurobond it intends to offer this year.
Udoma forecasted economic growth rates of 3 percent for 2017, 4.6 percent for 2018 and 4.4 percent for 2019, up from a contraction of 0.4 percent in the first quarter of 2016. [myad]
