Reps Propose $42.50 oil benchmark, N350 to dollar for 2017 Budget

Ahead of President Muhammadu Buhari’s presentation of the 2017 Budget proposal to the joint House of the National Assembly, Wednesday December 14 2016, the House of Representatives Tuesday proposed $42.50 per barrel with a proposed daily production of 2.2 million barrels per day and pegged the exchange rate of the Naira to a dollar at N350. This is as the House adopted the 2017 to 2019 Medium Term Expenditure Framework (MTEF) and fiscal strategy paper (FSP).
Moving the motion for the adoption of the MTEF/FSP, leader of the House, Hon.Femi Gbajabiamila, disclosed that section 11(2) of the Fiscal Responsibility Act, 2007, provides “that the MTEF shall be considered for approval with such modifications, if any, as the National Assembly finds appropriate by a resolution of each House of the National
Assembly”.
He also noted that section 11 (3) of the FRA, 2007 states that “the MTEF shall contain, among other things, a
macro-economic framework setting out the macro-economic projections for the next three financial years, the underlying assumptions for those projections and an evaluation and analysis of the macro-economic projection\\for the preceding three financial years”
Explaining that projections by some analysts have it that shortage of forex supply may push exchange rate to as high as N350 to the dollar in the official and N500 in the parallel markets recommending that “the budgeted exchange rate of N290 per dollar is unrealistic and should be moved to N350 to encourage foreign capital inflows”
Gbajabiamila said that the proposed oil benchmark by the executive arm of $42.50 per barrel with a daily production of 2.2million barrels per day seem to be realistic as oil is currently trading at about $50 per barrel”.
He explained that “although there is a steady improvement in oil prices, the government has chosen to play safe and
benchmark oil price at $42.50, $45 and $50 for 2017, 2018 and 2019.
“With current price level of over $50 per barrel and Nigeria’s current output at 1.9m bpd, the estimates are conservative enough especially with OPEC output freeze last week.”
The lawmaker posited that the revenue target of N4.169 trillion and total expenditure of N6.687 trillion are audacious to move the country out of recession but are achievable only “on effective combination of strong fiscal and monetary tools by government, increasing the tax base in the country, curtailing militancy in the Niger Delta and injecting back looted funds, diversification of the country’s revenue sources, controlled government spending and strong anti-leakage and anti-corruption drives.
He noted that GDP is projected to grow at 3.02 percent in 2017, while inflation is expected to moderate to 12.92 percent. while consumption is projected to increase to N80.5 trillion. He however said that GDP growth at end of the third quarter in the year slowed to 2.24 percent, while inflation rose to an all-time high of 18.3 percent. These budget growth levels in GDP and inflation are not achievable in 2017.
The House consequently mandated its joint committees on finance, appropriation, national planning and economic
development, legislative budget and research and aids, loans
and debt management to further look into the document.
Meanwhile, President Buhari is expected to present the 2017 budget proposal to the joint session of the National Assembly today.
The proposed budget of N7.28 trillion represents an increase of ‎about 19.95 per cent over the 2016 Appropriation of N6.07 trillion.