…Targets $42.5 oil benchmark for 2017
By Abdulrahman Abdulraheem
The Federal Executive Council (FEC) has approved the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (SFP) for 2017-2019 budget period.
Briefing State House correspondents after Wednesday’s Federal Executive Council meeting, Minister of Budget and Planning, Senator Udo Udoma, announced the oil benchmark targets as follows: 2017, $42.5 per barrel; 2018, $45 and 2019, $50.
According to the minister, the Federal Government was looking at a an exchange rate N290 to a dollar for 2017.
He said for the current fiscal year, the government had released over N400 billion for capital expenditure and was also meeting up in the area of recurrent expenditure.
“As you know the Fiscal Responsibility Act requires the executive to prepare the MTEF and send it on to the National Assembly for their consideration. And it is on the basis of the MTEFF that the next budget will be fashioned. So in short we started the process of preparing the 2017 budget. Before the MTEFF was presented to FEC for consideration, there was an extensive consultation with the private sector, governors, NGOs etc.
In the 2017-2019 MTEFF, the government intends to intensify efforts in pursuing manpower driven economy. So we intend to intensify effort to diversify the economy, we intend to go on with the implementation of ongoing reforms in public finance, we intend to enhance the environment for ease of business so as to generate private sector investment. We intend to continue to pursue gender sensitive, pro-poor and inclusive social intervention schemes similar to what we did in 2016, our social intervention programmes is going to be sustained,” he said.
The minister continued: “We intend to devote even more resources to critical infrastructure projects just as we did this year. So we will continue to spend more on roads, rails, transport infrastructure, ports and so on. We intend to focus on plane governance and security and we intend to maintain the zero-based budgetary approach. Let me share with you some of the key parameters and assumptions which will be underpinning the 2017-2019 MTEFF.
Oil price benchmark: We intend to use $42.50 as a reference price in 2017. We are projecting $45 in 2018 and $50 in 2019. So we are keeping to the very conservative in terms of the reference price of crude oil even though we are expecting it to go higher than this but we are keeping to an extremely conservative price scenario.
In terms of oil production, we are keeping to the same level of this year for 2017 and that is 2.2 million barrels per day. For 2018 2.3 million barrels per day, for 2019 2.4 million barrels per day. In terms of growth rate, we are targeting in 2017 a three per cent growth rate, 2018 a 4.26 per cent growth rate and 2019 a 4.04 per cent.The reason 2019 is slightly lower than 2018 is because that is an election year and usually in an election year there are uncertainties we have also made provision for that.”
Asked to explain why the government was benchmarking only revenue figures from oil at a time it claimed to be diversifying the economy, the minister explained that what he gave were mere highlights, adding that in the details of the framework, there were provisions for VAT, customs and other sources of income.
” Even though we want to diversify, we still have to use a particular number to plan in terms of revenue from crude oil. It doesn’t mean we don’t use numbers for other receipts. I was just reading the highlights. We have numbers for everything, we have numbers we expect to get from customs, VAT, independent revenue etc. So we have numbers for all the things we expect but because oil is volatile and its an area that has caused us to be where we are today, we want to assure Nigerians that are not going back to using high estimates even though we sense that prices may be moving towards $60 per barrel in the next year or so, we are still going to use conservative number,” he explained.
