The Federal Government yesterday revised downward its earlier forecast of 2.9% growth for the nation’s economy this year, saying rather, the economy will contract by 3.4%.
A news report by Reuters quoted the Director-General of the Budget Office, Ben Akabueze, as giving this hint during a web conference about the impact of low oil prices on the nation’s economy.
He explained that given the lingering COVID-19-triggered crisis in the global economic system, Nigeria’s oil revenues were expected to fall by more than 80%.
This is even as the Minister of Finance, Budget and National Planning, Zainab Ahmed confirmed plans by government to further cut 2020 budget oil price benchmark to $20 per barrel, down by $10 per barrel slash from the March 18 adjusted price.
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“We’re in the process of an amendment that is bringing down the revenue indicator to $20 per barrel,” Ahmed said.
She said ongoing Nigerian oil and gas projects would be “delivered much later than originally planned” due to oil and gas upstream sector’s budget cuts.
The finance minister said Nigeria was in talks to defer debt service obligations to “2021 and beyond”.
Ahmed said ongoing discussions with the lenders “it’s not debt forgiveness, it’s just rescheduling of our obligations,”
Although the minister did not provide details of the lenders with whom talks had been opened with, she said Nigeria was spending around 58% to 60% of revenues to service debt, thereby necessitating the government’s request.
Akabueze also predicted that said debt servicing costs would rise by N200 billion this fiscal year.