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Oil Price Fall: Jonathan wants 2015 Budget Reduced by N235 Billion

Nigeria's Minister of Finance  Dr Okonjo Iweala

Ayodele Afolabi, Abuja

As a result of drastic fall of price of oil in the international market, which has dropped, from about $100 per barrel, President Goodluck Jonathan has proposed a drastic review of key parameters upon which the 2015 budgets estimates were to be based.

Jonathan had in an earlier letter forwarded to the National Assembly in September, containing the 2015- 2017 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF & FSP) , proposed a total expenditure profile of N4.817 trillion as the 2015 estimates with $78 as oil benchmark, oil production of 2.2782 million barrel per day and N160 to a dollar as average exchange rate.

But in a revised MTEF and FSP   forwarded to the Senate yesterday, the President is proposing a total expenditure profile of N4.661 trillion for the 2015 budget estimates as against N4.817 earlier proposed, indicating a reduction of about N235billion.

Also, in the latest proposal, $73 per barrel is fixed as oil price benchmark as against $78 earlier proposed.

A slight change is also effected in the exchange rate as one of the key parameters upon which the budget would be based, while in the MTEF & FSP document earlier forwarded, N160 to a US dollar was proposed as exchange rate, N162 to a US dollar is proposed in the latest document.

The N235 billion shortfall in the latest proposed total expenditure profile arose from cuts effected from critical areas like SURE-P which had N259billion earlier earmarked for its capital expenditure but reduced to N184billion in the latest proposal.

Others are the MDAs capital expenditure, earlier estimated for N1.029trillion but now reduced to N872billion Ditto for subsidies for petroleum and kerosenes reduced in billions from earlier proposals made.

The President’s letter for the new proposals titled: “Submission of Revised 2015-2017 Medium -Term Expenditure Framework”, reads in part: ” As you may recall, I had transmitted the 2015-2017 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF&FSP) to the National Assembly for consideration and approval.” However, recent developments in the international oil market have necessitated that NTEF be revised.”

Consequently, following further consultations with key stakeholders, adjustments have been made to some of the key parameters as well as to some fiscal estimates in the MTEF.”I hereby forward copies of the revised 2015-2017 MTEF to the National Assembly, and hope that it will receive your kind expeditious consideration in order to bring the 2015 FGN Budget preparation process to quick closure.”



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