2016 budget should not be based on oil revenue

yinka ogunlami

December 27, 2015 9:25 AM

Femi Gbajabiamila, majority Leader of the House of Representatives suggested that the FG should not use oil revenue as the main source of financing the 2016 budget.

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Femi Gbajabiamila, majority Leader of the House of Representatives suggested that the Federal government should not use oil revenue as the main financing source for the 2016 budget.

“I would have preferred, and it is not too late, a situation where (we) close our eyes to the petrol dollar for next year’s budget and pretend we don’t even have oil revenue,” Gbajabiamila said in an interview.

He believes that the dwindling crude price puts the budget assumption under threat.

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When the president brought the MTEF, the benchmark was pegged at $38, now, it is $35, which is far below the benchmark.

Two weeks ago, while discussing the 2016-2018 MTEF, Mr. Chike Okafor, a member of the joint committees on Finance, Appropriations, Aids/Loans/Debt Management expressed his doubts over the workability of $38 proposed as the crude oil benchmark for the 2016 budget.

Even while President Buhari was presenting the 2016 budget at a joint session of the National Assembly, an estimate of N6.06Trillion, some members already expressed doubts over the sustainability of the $38 against the tumbling prices of crude globally.

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President Buhari also admitted while presenting the budget estimates on Tuesday that a barrel of crude was at the time “$32”, a figure that was $6 below the budgeted $38.

An official of the House said that there was “no way $38 could be sustainable.”

“We are all aware of what is happening to crude oil prices. We have gone down far below $38. “There are projections that we should expect a further dip in prices, which could mean restructuring the entire budget.

While some express doubts on the price, some are optimistic that the IMF’s prediction will not affect all the projections approved by the National Assembly.

Some members of the Senate believe that the oil price would rise in 2016.

“We are, at the moment, confident that the oil benchmark of $38 is appropriate for the 2016 budget implementation. We are also confident that rather than going down, the price of crude will rise in the New Year based on the various projections by experts. So there is no cause for alarm.” Said Senator Rafiu Ibrahim.

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