Trouble looms for Nigeria’s economy as oil price plunges to $58 from $80 highs

The international oil benchmark, Brent crude, has fallen to its lowest level this year and below the proposed benchmark for Nigeria’s 2019 budget, with economic experts describing the development as a cause for concern for the country.

Brent, against which Nigeria’s oil is priced, plunged by $3.80 to $58 per barrel on Sunday as of 5:00pm Nigerian time. It rose to a four-year high of $86.74 per barrel early last month from around $66 at the start of this year.

The Federal Executive Council, on October 24, approved the government’s proposal of N8.73tn for the 2019 budget, and pegged the price of crude oil at $60 per barrel, up from $50.5 for the 2018 budget.

The Managing Director of Financial Derivatives Company Limited, Mr Bismarck Rewane, in a telephone interview on Sunday, said the government would need to revise spending and the oil price benchmark for the 2019 budget downwards.

He said some projects would be deferred, the country’s trade surplus would reduce, and the external reserves would come under pressure. The reserves, which rose to a high of $47.865bn on May 10, fell to $41.52bn as of November 22, data from the Central Bank of Nigeria showed.

Source: The Punch

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