FG Sets 2017 Oil Price Benchmark At $42.5 Per Barrel

The Federal Government on Monday, July 25, revealed its benchmarks for the 2017 budget, fixing oil price at $42.5 per barrel and production output at 2.2 million barrels per day.

Minister of Budget and National planning, Udo Udoma disclosed the government’s plan on Monday at medium term fiscal framework public consultative forum with Civil Society Organisations (CSOs) and the Organised Private Sector.

He revealed that FG expects oil output to move up to 2.2 million barrels per day in 2017, rising to 2.3 million and 2.4 million in 2018 and 2019 respectively despite hostilities in the Niger Delta region.

The government also expects oil prices would firm to $45 in 2018 and $50 in 2019. Udoma believes the naira would settle at 290 against the dollar in 2017 as against its current over N3000 per dollar price.

Speaking on 2016 budget, the Minister said the Federal Government had spent N2.1 trillion in the past two months, with N598.63 billion going to service existing debts and N331.58 billion on capital expenditure. He said that Company income tax (CIT) is projected at N1.788 trillion in 2016, but expected to rise to N1.86 trillion in 2017.

Udoma also told the CSOs that the nation’s value added tax (VAT) was also expected to grow to 42.4 percent in 2017 as states ensure active generation of internal revenue.

According to him, non-oil revenue would be the game changer for the Buhari administration, urging the private sector to work with the government to deliver the much-needed change.

The 2016 budget was predicated at oil price of $38 per barrel, while naira was put at 197 to the dollar. According to Bismark Rewane, economist and CEO of Lagos consultancy Financial Derivatives, the oil price projections remains conservative but the risk of further attacks in the Niger Delta are likely.

Crude sales currently account for around 70 percent of government revenue and 90 percent of foreign earnings in Africa’s biggest economy.

Udoma also said currency assumptions for the 2017-2019 period were for a steady naira/dollar rate of 290. That compared with a rate of 313 on Monday afternoon.