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FG to lower 2020 budget oil benchmark to $20/pb

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PLANS are ongoing by the Federal Government to review the 2020 budget to reflect an oil benchmark of $20 per barrel.

  Federal Minister of Finance, Budget and National Planning Minister, Zainab Ahmed, who disclosed this yesterday during a web conference about the impact of low oil prices on Nigeria’s economy.

  A further downward revision will mean that the Federal Government has now dropped the benchmark from an initial $57 per barrel to $30.

The report said Ahmed also intimated on plans by FG to cut oil production to 1.7 million barrels per day (mbpd), from the 2.1 mbpd previously proposed in the budget.

  “We are in the process of an amendment that is bringing down the revenue indicator to $20 per barrel.”

  Other key highlights from the conference include; plans to defer debt service obligations to 2021 and beyond until macro conditions improve.

  An 80 perecnt drop in estimated net oil & gas revenue available for Federation Account Allocation Committee (FAAC) distribution to N1.1 trillion against the N5.5 trillion previously earmarked.

  A marginal drop in Customs projected revenue to N1.2 trillion in 2020 from the previous N1.5 trillion.

  While the amount accruable to the federation account is now projected at N3.9 trillion from the initial N8.6 trillion.

  The government is also looking at providing support for the aviation sector as part of measures to alleviate the impact of COVID-19.

Equally, with the coronavirus pandemic rapidly ravaging the global economy, the federal government is planning to inject N2 trillion as an intervention in the economy.

  Federal Minister of State for Budget and National Planning, Clem Agba, dropped the hint at a webinar yesterday.

He also said the government would support airlines as the aviation sector loses N21 billion monthly, due to the pandemic.

  According to him, Economic Sustainability Committee has outlined five broad policy objectives with which to deal with the challenges.

  “All in all, when everything is put together, both government funding and the funds we are expected to get from the Central Bank of Nigeria (CBN), Banks of Industry and other multilateral agencies and grants that we are receiving, we expect to get a stimulus of about N2 trillion going into the economy. We are also looking at how to support the Aviation sector.

Like you know, a lot of planes are parked and this is causing almost N21 billion (loss) on a monthly basis. We are looking at how to provide some form of bailout support to ensure that the industry doesn’t die.

Of the $2.5 billion facilities from the World Bank, about $1 billion of it will be going to the states as loans. These are concessionary loans. Mr President has already approved N850 billion loan from the domestic capital market” he said.

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