Barely hours after the world’s top oil exporter, Saudi Arabia, began a global oil fight, Brent crude oil crashed by about 30 per cent, sending Nigeria into a revenue crisis.
According to details on oil data site, Brent crude sold at $35.42 Monday morning.
In December 2019, President Muhammadu Buhari signed a N10.50 trillion 2020 national budget. In the budget, Nigeria pegged oil production at 2.18 million barrels per day, with a price benchmark of $57 per barrel.
Now confronted with having only about half of what it projected in revenue for 2020, the government may not be able to finance the budget.
The outbreak of the coronavirus epidemic has seriously impacted on the world economy, causing disruption in stock markets and supply chains around the world.
In the case of Nigeria that makes most of its foreign earnings from oil and produced its oil at about $30 per barrel, the price crash portends a recession for the economy, according to experts.
The Minister of Finance, Zainab Ahmed, last week announced that a mid-term review of the 2020 budget will be carried to reflect the realities on the ground.
It is yet unclear if the cut will apply to the earmarked allocations to the health, education, agricultural and power sectors, which have a controversy of insufficient budget funding.