Coronavirus: Oil price freefall very dangerous to Nigeria’s 2020 budget
Strong threat is currently facing Nigeria’s fragile economy with regards to the implementation of the ongoing 2020 national budget as coronavirus global pandemic is forcing oil prices on a steady downward fall.
The 2020 budget, which was signed by the President Muhammadu Buhari, in December, was based on oil production of 2.18 million barrels per day with an oil price benchmark of $57 per barrel.
Besides, the Federal Government is looking to generate N2.64tn oil revenue, which is 32.34 per cent of expected total revenue for this year, with non-oil revenue projection being N1.80tn.
But with the unfolding trend of oil price remaining below the benchmark, indications are rife that huge budget deficit may mar the delivery before year.
Already, the international oil benchmark, Brent crude, has tumbled below the $50 per barrel mark as the spread of coronavirus stoked fears that a slowing global economy would hit energy demand.
Also, Brent, which rose to as high as $70 per barrel in January, has been on a downward trend dropping as low as $49.67 per barrel on Saturday and since the coronavirus broke out.
Though OPEC and OPEC-plus are working on imposing more cuts to raise hopes of rise in oil prices, facts from several production economies show lull in manufacturing activities where oil is highly demanded for power.