Oil price fall sees Nigeria cut spending

NIGERIA was planning spending cutbacks as falling oil prices ate into the country’s revenue, Finance Minister Ngozi Okonjo-Iweala said yesterday.

For budgetary purposes, the minister is proposing an oil price benchmark of $73 (R807) a barrel next year, down from $77.5 a barrel this year.

Nigeria, which relies on oil sales for 70 percent of revenue, expected to produce 2.27 million barrels a day next year, generating revenue of 6.833 trillion naira (R4.4 billion), she said. This year’s budget was based on output of 2.39 million barrels a day.

“We can and will control the way the country responds” to a global price drop, she said, adding that Nigeria had plans if the oil price fell further.

To make up for weaker oil income, the government, which is heading into an election year, wants to bring in a greater tax take. Part of the drive, she said, officials were drawing up a list of luxury goods where surcharges might be levied – champagne, jet aircraft and high-performance cars were targets. Printing – additional naira was not an option, she said, and would not seek to borrow heavily domestically.

“The worst enemy of the poor in any country is inflation. We won’t compensate by printing money.” A spending target of 4.66 trillion naira would be suggested for the 2015 budget. – Bloomberg