Barely a few days to the end of the year, the price of Nigeria’s Bonny Light has stabilised at $50 per barrel in the international market, about 25 percent above the 2021 budget benchmark of $40.
This shows that pressures on government revenue and expenditure for 2021 budget as well as a significant portion of 2020 budget are easing off.
However, with output level still below the benchmark of 1.8 million barrels per day, the ease off may prove to be marginal if improvement in production is not recorded soon.
Also the prices have been relatively unstable, predominantly on the low side of the $40s for most part of the fourth quarter 2020.
In an interview with Vanguard, Lead Promoter, EnergyHub Nigeria, Dr. Amieyeofori Felix, said: “The 2021 budget is already sitting on the deficit to be funded through additional borrowing, and given our high debt service to revenue, the low crude price and lower output will definitely affect the revenue we retain after debt servicing, and because we cannot afford to remain in the black hole, the government will resort to additional borrowing to fund it’s budget and development activities.”
In his 2021 budget address to the National Assembly, President Muhammadu Buhari, had said: “The 2021 Appropriation Bill, is designed to further deliver on the goals of our Economic Sustainability Plan. This Plan provides a clear road map for our post- Coronavirus economic recovery as a transitional plan to take us from the Economic Recovery and Growth Plan (2017 – 2020) to the successor Medium-Term National Development Plan (2021 – 2025). In view of the many challenges confronting us, we must accelerate our economic recovery process, promote social inclusion, and strengthen the resilience of the economy. The 2021 Appropriation has, therefore, been themed the ‘Budget of Economic Recovery and Resilience’. It is expected to accelerate the pace of our economic recovery, promote economic diversification, enhance competitiveness, and ensure social inclusion.”