National Assembly to review budget benchmark

There were indications yesterday that the $38 crude oil benchmark for the 2016 budget will have to be reviewed downward in line with the current realities.

Minority Leader in the House of Representatives, Leo Ogor, who dropped the hint during a chat with The Guardian said his colleagues in both arms of the National Assembly would subject the issue to deliberations to arrive at a more realistic benchmark for the budget.

The 2016 budget is based on a crude oil benchmark of $38 per barrel and a production estimate of 2.2 million barrels per day for 2016, just as the proposed deficit will be financed through a combination of domestic borrowing of N984 billion and foreign borrowing of N900 billion, totalling N1.84 trillion.

The oil price has also been heading upwards since hitting its lowest point in the middle of February, though it still remains volatile and low. From February 11 when the Brent crude last traded below $30 a barrel, oil price has moved up and was in the region of $37 per barrel as at yesterday.

” We know that the Medium Term Expenditure Framework (MTEF) is a document that can be subjected to review. The House would take another look at the price because if the oil price continues the way it is going, then we may have a deficit that will be increasing on a continuous basis.

” We will subject it to some intellectual discussions and we would look at it vis a vis the current market price and then take a firm position. But for what it is now, I don’t think it is very feasible. It is not very realistic at this particular time because the oil price is still hovering below the benchmark. If we have to fix the benchmark, it cannot be what we have currently because we sometimes fix $5 above the proposed benchmark from the executive.”

Ogor assured that the mid-March deadline for the passage of the 2016 budget remains sacrosanct and all the committees of the lower legislative chamber are working round the clock to achieve the goal.