The Senate Finance Committee proposed on Wednesday to cut the oil price benchmark in the 2015 Budget to $52 per barrel from its current $65, a source at parliament has told the Reuters news agency. The upper house debated the change proposed by the committee on Wednesday but had not yet reached a conclusion.
The Ministry of Finance has previously insisted that the benchmark would not change, given that the government is under pressure not to slash spending, especially on salaries.
Despite the fact that GDP growth, only 15 percent of which is fed by oil, remains strong, the naira has hit a series of record lows against the US dollar in the last three months, finally settling at 199 to the greenback yesterday, despite the apex bank burning through billions of dollars of reserves to prop it up.
It is unclear where the cuts will happen if the new benchmark sails though since capital expenditure has already been slashed to 9 percent of the budget and the government struggling to pay salaries in the civil service. At the same time spending on military equipment is rising because of the Boko Haram insurgency.