Oil revenue

Business: Nigeria Opens Cash Tap as Oil Revenue Runs Dry

Last updated on September 11th, 2021 at 02:48 pm

The government of Nigeria, whose revenue could be slashed by more than half this year due to the oil-price slump, finalized plans for a revised budget that keeps spending almost intact, and that will mean more borrowing.

Finance Minister Zainab Ahmed got approval from the West African’s nation’s cabinet on May 13 to go ahead with the new budget that cuts expenditure by only 0.6% from what was proposed before oil prices dropped.

The government plans to spend 10.52 trillion naira ($27 billion) this year, even as it reduced the crude benchmark in the budget to $25 a barrel from $57.

Nigeria will have to rely on borrowing to finance the spending plan. The country targets revenue of 5.6 trillion naira, but it has never collected this much, even when oil prices were higher.

In 2019, Nigeria hit 58% of its revenue target when crude averaged $61 a barrel, with earnings from the commodity contributing half of income.