FG to Further Slash Oil Benchmark to $20 Per Barrel

• FG to Further Slash Oil Benchmark to $20 Per Barrel

The Minister of Finance, Budget and National Planning, Zainab Ahmed, has said the Federal Government is in the process of reducing oil benchmark for 2020 to $20 per barrel, according to Reuters.

In March, the Federal Government had slashed oil benchmark from $57 per barrel to $30 after oil price plunged more than 70 percent due to the COVID-19 pandemic.

The fall in global oil price plunged Nigeria’s foreign revenue generation and further eroded the nation’s fiscal buffer needed to cushion the negative impact of the pandemic.

Like other nations struggling with the negative impacts of COVID-19, Nigeria has approached multilateral and other financial institutions for financial assistance amid mounting foreign and local debts.

However, in a web conference which focuses on the impact of low oil prices on the nation’s economy, Ahmed said the government is in the process of lowering oil benchmark for the year again to $20 per barrel.

“We are in the process of an amendment that is bringing down the revenue indicator to $20 per barrel,” the minister said at the conference.

According to a recent report, over 60 cargoes of Nigerian oil remained unsold as demand for the commodity dropped by more than 30 million barrels per day in April alone. Forcing the government to cut the 2020 budget by N1.5 trillion to reflect the nation’s current economic position.

The central bank devalued the Naira by 15 percent to slow down the rising capital flight and reduce the impact of weak revenue on the nation’s reserves. Inflation rate rose to 12.26 percent in March while the unemployment rate stood at 23.1 percent but expected to surge to 30 percent this year as the impact of COVID-19 crystalises.