Punch reports “The Federal Government has proposed $78 as the benchmark price for a barrel of crude oil and fixed the exchange rate at N160 per dollar for the 2015 national budget”.
This is against the backdrop of a rapidly falling price in oil which as drop to under $90 in the last few days, it’s lowest in 4 years. The article claimed “The projection, which was contained in the Medium Term Expenditure Framework and Fiscal Strategy Paper sent to the Senate by President Goodluck Jonathan on Wednesday, was $4 higher than this year’s benchmark”.
Now hear their reason
“The President, in a letter that accompanied the documents, noted that the MTEF and FSP were prepared against the backdrop of the global economic uncertainties and developments in the domestic environment
He said the $78 proposed oil benchmark was to ensure that planned spending was set at prudent and sustainable level and was consistent with government’s overall development set out in the Transformation Agenda of his administration.
In fixing the oil benchmark, the MTEF stated that the proposal was driven by the need to be cautious in the revenue projections given the volatile nature of oil prices and the need to build the nation’s fiscal buffers, which had been very useful in periods of revenue shocks.”
Last year’s budget was $77.5 (even the government proposed ($74) when Oil price was trading at over $100 for years and now they have proposed it at $78. The reasoning behind this sounds outdated to me and I hope someone up there comes down to reality.
Get the article in Punch