President Muhammadu Buhari on Monday constituted a committee to assess the impact of the Corona virus outbreak on Nigeria’s economy with a view to cut down the size of the 2020 budget and reduce the $57 oil benchmark.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, announced this while addressing State House correspondents after a closed door meeting with the President at the Presidential Villa, Abuja.
President Buhari had in December 2019 signed the 2020 budget of N8.83 trillion into law.
The budget, tagged: “Budget of Sustaining Growth and Job Creation,” which key assumptions and parameters were based include crude oil production of 2.18 mbpd, while the benchmark oil price was $57.
The budget assumed a deficit of 1.52 per cent of the estimated gross domestic product – representing around N2.18 trillion – to be financed through foreign and domestic borrowing.
However, the minister revealed that the committee, which will revisit the crude oil benchmark and lower the price, is expected to submit its report to the President by March 11.
Ahmed said: “We just met with the President to discuss the matter of the impact of the Coronavirus on our economy and Mr. President has formed us into a committee, with the Minister of State, Petroleum Resources, the Central Bank Governor, the GMD NNPC and myself as members.
“Our mandate is to make a 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 brief Mr. President tomorrow or Wednesday morning and after that we’ll also have more substantial information for the press.
“But 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.
“Where it will be lowered to is the subject of the work of this Committee.
“What the impact will be on that is that there will be reduced revenue to the budget and it will mean cutting the size of the budget.
“The quantum of the cut is what we are supposed to assess as a committee.’’
The Minister of State, Petroleum Resources, Timipre Sylva, who also fielded questions from the correspondents, said in the coming days, when all oil producing nations begin to see the effect of the reduction of oil prices, the Organisation of Petroleum Exporting Countries might meet again and reconsider its position on cutting production.
On the issue of engaging Russia, Sylva said: “We as a member of OPEC are not in a position to take that engagement on our own unilaterally.
“There was a disagreement between OPEC and OPEC+, it’s not just Russia, but the biggest producers within OPEC and OPEC+ are Saudi Arabia and Russia.
“We believe that in the coming days when all of us would have begun to see effect of the reduction of prices, OPEC and OPEC+ might need to meet again and reconsider our positions.
“Meanwhile, we expect also that a lot of discussions are going on at the level of Saudi Arabia and Russia, but as Nigeria, we are not in a position to begin to engage members on this matter.”