Nigeria: Crude Oil Price Rises Above 2016 Budget Benchmark

This might be good news for Nigeria, as there has been a slow but steady increase in the global prices of crude oil. It is well known that a significant bulk of the country's revenue is from oil earnings.

The drastic plummeting of oil prices had occasioned untold financial difficulties on both the federal and state governments, with backlogs of salaries and abandoned projects,

However, as at yesterday, 7th March, 2016, crude oil was trading above $39 per barrel. This new price is also above the benchmark stated in the 2016 budget presented by President Buhari. By implication, the country will likely make more revenue from oil than envisaged in the budget.

Commenting on the development, Wilifred Iyiegbuniwe, professor of finance at the University of Lagos, said though the increase will have a positive impact because the inflow of foreign currency will improve, the benchmark should not be reviewed.

“Any recovery of the oil proceeds should go to a special fund. The economic team and the Federal Government should determine what should be done with it. “Such excess revenue should be used to diversify the economy into such areas as agriculture, solid minerals and manufacturing. However, the benchmark should not be reviewed," he said.

Also, Henry Boyo, a famous Nigerian economist asked a number of rhetorical questions in reaction to the increase in oil price.

“What happened every time the price was high above the benchmark? Was there greater employment? Was there relief in exchange rate? Was there improved productivity? We should think collectively as Nigerians, who are stakeholders in the polity.”

Nigerians are hopeful that the increase prices of oil will translate into more income for the government and ultimately better living standard for the masses.
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