In a timely recognition of how the current lull in the global oil market might stand in the way of a meaningful implementation of the 2020 budget, the Central Bank of Nigeria (CBN), has advised the Federal Government to reduce the $57 benchmark downward.
The apex bank chief, Godwin Emefiele, gave the counsel Tuesday afternoon during the presentation of a communiqué, detailing the outcome of the bank’s Monetary Policy Committee session in Abuja.
Only recently, Paris-based International Energy Agency (IEA) forecast an over-supplied global oil market in 2020 with non-OPEC supply alone anticipated to glut the market by as high as 2.3 million barrels per day. This suggests a figure almost double of the expected increase in demand put at 1.2 million barrels per day.
The 2020 appropriation bill, currently under consideration at the National Assembly, was prepared based on $57 oil price benchmark and 2.18 million barrels daily production estimate by the executive. The exchange rate was fixed at N305 per dollar.
Mr Emefiele affirmed that reconsidering the oil price benchmark was necessary in order to build fiscal buffers.
“On crude oil price, the committee noted the lull in the future market suggesting that prices would remain relatively weak into the future. The committee, therefore, urged the Federal Government to reconsider its 2020 budget oil price benchmark of $57 to the barrel to build fiscal buffers,” he stated.
Lauding the positive results of the CBN Loan to Deposit Ratio reform imposed on banks, he asserted that more than N1.16 trillion funding had been availed to the private sector by the move. Different sectors of the economy benefitted from the fund from May to October this year.
Speaking on behalf of the committee, Emefiele called on fiscal authorities to invest more in sectors of the economy capable of generating growth and employment.
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