Nigeria releases oil benchmark, oil production forecast for 2017 budget

 

The Federal Government on Monday set the fundamental assumptions for the 2017 budget.
The Minister of Budget and National Planning, Udoma Udoma, said at the presentation on the 2017-2019 medium term expenditure framework (MTEF) to civil society groups in Abuja that next year’s budget would be based on oil benchmark of $42.5 per barrel and average daily oil production output of 2.2 million barrels per day.
As part of the key assumptions, the Minister said crude oil benchmark price and production under the 2018-2019 MTEF would be at $45 per barrel and $50 per barrel respectively.
The government also set oil production output for 2018 at about 2.3 million barrels per day and 2.4 million barrels per day in 2019.
Inflation rate may not drop to a single digit in the two years as government assumes 11.88 percent and 12.57 percent respectively.
But, the GDP growth rate is projected to rise to 4.04 per cent in 2019, averaging 3.77 per cent during the MTEF period.
The minister said government would be working with an exchange rate assumption of N290 to the dollar consecutively for the three years, while the nominal oil gross domestic product (GDP) was set at about N7,775 billion for 2017, N8,997 billion for 2018 and N10,885 billion for 2019.
The 2016 Federal budget was based assumptions on about 2.2 million barrels per day oil production at $38 per barrel, with inflation rate at 12.92 percent and gross domestic product (GDP) growth of 0.35 per cent.

Despite the global economic downturn, which has adversely impacted crude oil exporting countries, as a result of low crude oil prices, the Minister said government remained optimistic that these assumptions were realisable.
Nigeria, a leading member of the organisation of Petroleum Exporting Countries (OPEC), has been one of the worse hit by the decline, a situation that is worsened by the increasing spate of attacks by irate armed on oil and gas installation in the Niger Delta region since January.
The series of sustained coordinated attacks by armed groups, led by the Niger Delta Avengers (NDA), has significantly cut the country’s oil production from 2.2 million barrels per day (bpd) at the beginning of the year, to about 1.6 million barrels per day.
Nigeria relies on the export of about 70 percent of its oil production capacity to raise revenue to fund its budget.
“Government expects that growth within the three year period would be largely driven by the non-oil sector as government intends to pursue export led growth and improved tax collection,” the Minister said.
“Company Income Tax (CIT) is projected to increase from N1.788 trillion in 2016 to over N1.86 trillion in 2017, and beyond, while Value Added Tax (VAT) collection and receipt is expected to increase by about 42.4 percent in 2017. Customs duties collections are projected to moderate in 2017 before picking up outer years,” he said.
Part of the fiscal strategies for the three years, the minister stated, would be in building on the framework of the 2016-2020 medium term development plan and strategic implementation plan for the 2016 budget.
“It is designed to reflate the economy out of recession to a sustainable and inclusive growth path,” Mr. Udoma said, “For 2017-2019, we want to do what we are doing now, but to do them better.”
He said government would extensively engage with the private sector to explain its policies and establish what other bottlenecks “we need to remove to stimulate investment in Nigeria.
“We would take advantage of the opportunities to invest in production, agriculture, solid minerals, manufacturing as well as generating Foreign Exchange by Exports of Goods and Services.
Mr. Udoma said his ministry was working at submitting the draft 2017 budget to the National Assembly by October this year, while perfecting government’s plans to return to a January to December fiscal budget year cycle starting with the MTEF.