The National Assembly has passed the 2018-20 Medium Term Expenditure framework MTEF, and raised the oil price bench mark to $47 from $45 per barrel. proposed by the executive The Medium Term Expenditure Framework was approved by the federal execute council and submitted to the legislators in August, is the framework used to prepare the 2018 budget.
The higher oil price benchmark “should not be overly problematic,” said Standard Chartered’s Razia Khan, given that the bank’s price estimate is $61 a barrel. Brent crude, the global benchmark, is trading around $62.70 a barrel. However, the new price assumption could hit efforts to accumulate foreign exchange reserves, as usually any earnings above the budgeted oil price will go into a government reserves account, Khan said.
Aside from the oil price benchmark, all other details contained in the document were kept the same by lawmakers as the framework was approved by both the Senate and the House of Representatives.
Nigeria is Africa’s biggest oil producer and crude oil sales make up two-thirds of government revenue. In the second quarter Nigeria emerged from its first recession in 25 years which was largely caused by low oil prices and militant attacks in the Niger Delta energy heartlands.
The budget framework projects crude production of 2.3 million barrels per day for next year. It also forecasts Nigeria’s economy will grow by 3.5 per cent next year, 4.5 per cent in 2019 and 7 per cent in 2020.
