A draft budget framework for 2017 submitted to National Assembly by Nigerian President Muhammadu Buhari is based on unrealistic assumptions about oil production and the currency exchange rate, lawmakers said yesterday.
The budget plans, which include spending a record N6.866 trillion to pull the economy out of recession, assume oil production of 2.2 million barrels a day and an exchange rate of N290 to the U.S. dollar. “There’s no doubt that the assumptions are not realistic. Even in times of peace, we cannot achieve 2.2 million barrels per day,” said Bukola Saraki, president of the Senate, the upper house of parliament.
“Our responsibility is to work on it and do the right thing,” he said, adding that the spending plans would be referred to Senate committees on Finance, Appropriation and National Planning to be reworked.
The framework must be approved by the Senate before the final budget for next year is submitted. Nigeria slid into recession in the second quarter for the first time in 25 years, largely because oil price fall. Crude oil sales account for 70 percent of government revenue.
It could be months before a final budget is passed into law. The 2016 budget became law in May after being delayed by several weeks due to wrangling between the government and the Senate. Attacks on energy facilities in the Niger Delta cut crude production, which was 2.1 million barrels per day (bpd) at the start of 2016, by more than a third earlier this year. But the oil minister earlier in November said production had returned to 2.1 million bpd following a ceasefire observed by many groups in the oil-producing region over the last few months.
The naira has fallen to 305 to the U.S. dollar since a peg holding it at 197 to the greenback was removed in June after 16 months. The currency has hit record lows against the dollar on the black market in the last few months. Ahmed Lawal, a senator from the president’s All Progressives Congress, APC, party, said basing spending plans on an exchange rate of 290 naira to the dollar was “not real” and had a “serious effect on budget implementation”. Figures released by the statistics office on Monday showed the recession had deepened with gross domestic product contracting by 2.24 percent year-on-year in the third quarter – worse than the 2.06 percent decline in the second quarter.
