The federal government is set to cut the country’s 2020 budget over the plummeting prices of crude oil.
President Muhammadu Buhari will get a report on Tuesday on what his government can do to salvage the N10.59trn budget.
The president set up the budget review committee on Monday and appointed the Minister of Finance/Budget/Planning, Mrs. Zainab Ahmed, as the chair.
The primary duty of the committee is to review the $57 oil benchmark for the budget and ultimately recommend an appropriate size, down from the current N10.59trn.
Other members of the committee are the Minister of State, Petroleum Resources, Mr. Timipre Sylva; Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele; and the Group Managing Director of the Nigerian National Petroleum Corporation, Mr. Mela Kyari.
The President had handed the assignment to the committee on Monday after he held a meeting at the Presidential Villa, Abuja, with the government officials.
Speaking with State House Correspondents after the meeting, Ahmed said the committee would determine the new benchmark for the budget.
She said, “Our mandate is to make a very quick assessment of the impact of this Coronavirus on the economy, especially as it effects the crude oil price.
“We will be writing a report and brief Mr. President tomorrow (Tuesday) or Wednesday morning. After that we will also have more substantial information for the press.
“It is very clear that we will have to revisit the crude oil benchmark price that we have of $57 per barrel. We have to revisit it and lower the price.”
She added, “Where it will be lowered (benchmark) is the subject of this committee. What the impact will be on that is that there will be reduced revenue to the budget as it will cut the size of the budget.
“The quantum of the cut is what we are supposed to assess as a committee.”
The Buhari regime gave its first hint on a possible cut of the budget after last week’s Federal Executive Council meeting.
The minster, when asked by reporters what the impact of Coronavirus would be on the budget, replied that “We are really concerned as a government.”
She disclosed that a mid-term review of the budget would be done soon to ascertain the impact of Coronavirus on the economy and move ahead to review the budget.
Sylva, who also spoke talked about the reported disagreement between the Organisation of Petroleum Exporting Countries and OPEC+ member states on how both sides would respond to the impact of Coronavirus on oil prices.
He said it was not a matter Nigeria could handle unilaterally, but would be handled at the level of OPEC versus OPEC+ bodies.
He explained further, “On the issue of engaging Russia, we as a member of OPEC are not in a position to take that engagement on our own unilaterally. There was a disagreement between OPEC and OPEC+. It is not just Russia, but the biggest producers within OPEC and OPEC+ are Saudi Arabia and Russia.
“We believe that in the coming days when all of us would have begun to see the effect of the reduction of prices, OPEC and OPEC+ might need to meet again and reconsider our positions.
“Meanwhile, we expect also that a lot of discussions are going on at the level of Saudi Arabia and Russia, but as Nigeria, we are not in a position to begin to engage members on this matter.”
Global oil prices have been unstable since January, worsening with the outbreak of Coronavirus in China and its rapid spread to many countries.
In December 2019 when Buhari signed the 2020 budget, Nigeria’s Brent crude was well above $60 per barrel. But, it soon began a free fall since January, dropping below the budgeted $57.