Nigeria will cut size of its budget in the face of sharp declines in the price of crude oil, the nation’s finance minister told reporters on Monday.
Zainab Ahmed, speaking in Abuja after a meeting with President Muhammadu Buhari, said a committee including herself, the minister of state for petroleum, the head of state oil company NNPC and the central bank governor would determine the size of the budget cut in the coming days and revisit the benchmark crude oil price of $57 a barrel used to calculate the budget.
Africa’s largest producer is facing major revenue shortfalls after oil prices plummeted far below its budgeted level of $57 a barrel following a bust-up between key producers Saudi Arabia and Russia.
President Muhammadu Buhari convened his top economic team and ordered them to come up with a report by Wednesday on how to tackle the fallout from the coronavirus crisis, Finance Minister Zainab Ahmed told reporters.
“What the impact will be of that is that there will be a reduction in revenues in the budget and it will mean cutting the size of the budget.”
Oil Minister Timipre Sylva said that in the short term Nigeria would look to ratchet up its oil output to over 2 million barrels per day to make up some of the drop in price.
“Obviously we will be increasing our production output since it is now the trend,” he said, without giving details on the target.
The minister insisted that Nigeria, a member of oil cartel OPEC, was still hoping for behemoths Russia and Saudi Arabia to start talking again once the impact of the price slump sinks in.
“We believe that in the coming days when all of us would have begun to see the effect of the reduction of prices, (OPEC and non-OPEC members) might need to meet again and reconsider our positions,” he said.