Nigeria to Revise National Budget amid Low Oil Prices

Nigeria to Revise National Budget amid Low Oil Prices

Nigerian President, Muhammadu Buhari, has asked parliament to withdraw the 2016 budget in order to make changes, Reuters reports. The Nigerian budget, which included tripling capital expenditures, had been unveiled in December. Under the previous budget, Nigerian government spending would be N6.08t and the government’s budget deficit would double to N2.2t ($11b).

“Mr. President has written to the Senate and the House of Representatives to withdraw the 2016 budget to enable him to affect some amendments following the further dwindling price of oil among other areas,” a source told Reuters.

Nigeria relies heavily on oil revenues to support state spending and has been heavily hit by low global oil prices – making the previous budget unfeasible, as it projected government spending on a $38 per barrel benchmark.

Low oil prices and budget issues have led to speculation that the Central Bank of Nigeria will need to devalue the Naira. The Naira, which is pegged to the dollar at N198 to $1, has fallen to N305 to $1 on the parallel market. Bloomberg reported earlier in the month that analysts expect a 20% revision in the Naira to 240-250 per dollar.

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