Nigeria factors in lower oil prices as it revises budget for next year

 
Joseph Millis
Nigerian finance minister Ngozi Okonjo-Iweala said falling oil prices are hurting the naira
Nigeria's finance minister yesterday proposed lowering the assumed benchmark oil price for the country’s 2015 budget to $73 per barrel from the $78 proposed in September, due to the recent sharp fall in global crude prices.

Ngozi Okonjo-Iweala said falling oil prices would impact Africa’s largest economy and top oil producer, requiring the government to cut non-essential spending and raise more revenues.

“The benchmark we proposed before now was not realistic,” Okonjo-Iweala told journalists in Abuja.

“We think that for now, let us bring the benchmark price down to $73 then have a series of additional measures so that at each price it falls to, we would be able to kick in appropriate measures to keep this economy going,” she said.

Brent crude prices, the index against which Nigeria’s oil is set, has fallen more than 30 per cent since July. Nigeria depends on crude exports for over 70 per cent of government revenues.

The fall has triggered a selloff in Nigeria bond and stock markets, hurting the local naira currency which is down almost eight per cent this year despite the central bank spending billion of dollars of reserves to defend it.

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