2017 Budget: $42 crude oil benchmark would have helped Nigeria save in ECA – FRC

The Fiscal Responsibility Commission stated on Tuesday that leaving the crude oil benchmark at $42 per barrel as contained in the 2017 appropriation bill would have made room for savings in the Excess Crude Account.
The Acting Chairman, Victor Muruako, told the News Agency of Nigeria in Abuja that “ordinarily, we at the FRC would have been of the view that even if it was left at $42, it would have made room for savings into the ECA.
“It is one of the benefits of the Fiscal Responsibility Act, which provides for savings above the benchmark price.”
President Muhammadu Buhari presented the 2017 Appropriation Bill to the National Assembly on December 14, 2016, with projected oil revenue at N1.99 trillion based on price benchmark of $42.5 per barrel.
Buhari had also presented the Medium Term Expenditure Framework and Fiscal Strategy Paper for 2017-2019 with the same price.
Muruako said that legislative arm of government changed the benchmark to $44.5 per barrel based on the reality on ground.
He noted that Organization of Petroleum Exporting Countries and non-OPEC members had, some weeks ago, reached agreements to cut back on oil production, which played up the dynamics of improvement in the price of crude oil.
He said: “It is not like the legislature changed it, but they looked at the reality.
“The dynamics are already getting clearer.
“It is possible that when the MTEF was submitted to the National Assembly, what was most obvious and realistic then could have been the $42 per barrel as submitted by the executive.
“So, when the two arms of government looked at it, they agreed that $44 would be more realistic.
“Though the argument by the National Assembly is also understandable that you cannot be talking about savings when you have not provided sufficiently for appropriation.”
The chairman commended the quick passage of the MTEF by the two legislative arms, adding that the harmonious passage showed the improved relationship between the legislative and the executive.
He noted that democracy was not about quarrels, fights and disagreements but about discussions and understanding each other.
Muruako stated: “In democracy, every arm of the government is very important; the executive must as a necessity, work harmoniously with the legislature and also the judiciary.
“Taking any of these arms for granted always leads to rancorous relationship and sometimes you find things which ordinarily should be smooth running into turbulent waters but we thank God that is not the case of the MTEF this time around.’’
NAN reports that the FRA 2007 was enacted to promote prudent management of the nation’s resources, ensure long term macro-economic stability and transparency in fiscal operations of the national economy.