The downward review of the crude oil benchmark for the 2020 budget to $25 per barrel has been approved by the Federal Executive Council (FEC).
The new threshold was approved by the FEC on Wednesday during a virtual meeting held at the Presidential Villa in Abuja.
The council also approved the review of the Medium-Term Expenditure Framework for 2020-2022 as recommended by the Ministry of Finance.
Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, while briefing newsmen on outcome of the FEC meeting, stated that the exchange rate was pegged at N360 per Dollar, while the crude oil output for the year was set at 1.94 million barrels per day, adding that the budget size was pruned by N71.5 billion to N10.5 trillion.
At the gathering, the council also approved the sum of N683 million to acquire 19 operational vehicles for the Nigeria Port Authority (NPA).
Also, FEC approved N47 billion for the provision of additional 40 megawatts of electricity to the national grid from Kashimbilla Dam in Taraba State through Takum, Wukari and Yandev.
Mrs Ahmed informed journalists that federal government plans to finance the budget by N5.158 trillion, with the remaining balance of N5.365 trillion to be sourced from loans.
“The borrowing, the multilateral loans drawdown coming from special accounts and coming from the privatisation will fund the fiscal deficit of N5.365 trillion that we have in the proposed amendment of the 2020 budget,” the Minister said.
Recall that recently, Mrs Ahmed, at a meeting, hinted that the oil benchmark would be further cut to around $20 per barrel.
In the initial 2020 budget signed by President Muhammadu Buhari in December 2019, the threshold was set at $57 per barrel.
However, the crash of crude oil prices at the global market this year necessitated a reduction to $30 per barrel in March 2020.
The commodity, which is Nigeria’s main source of foreign exchange earnings, has been selling between $25 and $29 in the past week.
This has been boosted by the supply cut deal entered into by oil producers, including those in the Organisation of the Petroleum Exporting Countries (OPEC), which Nigeria belongs to.
Members of the cartel, as well as non-members, agreed to slash production by 9.7 million barrels per day and Nigeria was asked not to produce more than 1.4 million barrels per day in May and June 2020.
