- As Oil price rises to $44.58
- still threatens 2017 budget benchmark
The Federal Government is set to release the first tranche of capital release of N350bn to its Ministries, Departments and Agencies for implementation of the 2017 budget.
The Minister of Finance, Mrs. Kemi Adeosun, disclosed this on Monday in Abuja during the public presentation of the 2017 Federal Government budget.
The event was attended by top officials in government, including the Minister of Budget and National Planning, Udo Udoma; Minister of State for Budget, Zainab Ahmed; Minister of Health, Prof. Isaac Adewole; and Minister of Foreign Affairs, Geoffrey Onyema, among others.
The 2017 budget christened, ‘Budget of Recovery and Growth’, was presented to the National Assembly on December 14, 2016, and passed by the lawmakers on May 11, 2017.
It was signed into law by the Acting President Yemi Osinbajo on June 12, 2017 and had a total expenditure outlay of N7.44tn, out of which N2.99tn was for non-debt recurrent spending; N2.36tn for capital expenditure; while debt servicing is to gulp N1.66tn.
Adeosun said her ministry was ready to make the release as soon as the budget was loaded, adding that a cash plan meeting would soon be held where the funds would be released to the MDAs.
“We are ready to make releases as soon as the budget is loaded. We have a cash plan meeting and we will release the first tranche of N350bn for capital projects,” she stated.
Udoma, in his presentation at the event, said the 2017 budget would run for one full year till June next year.
He, however, said that both the executive and the legislature were working on a template that would enable the country to commence a predictable budget year that would run between January and December of every year.
He added that if this arrangement was to commence from the 2018 budget year, then the 2017 budget would cease once the next year’s budget was passed and signed into law in January.
The implication of this, according him, is that some of the programmes of government contained in the 2017 fiscal document would be re-introduced in the 2018 budget.
In the meantime, oil price, which dropped below Nigeria’s 2017 benchmark price of $44.50 per barrel, weekend, has leaped from $44.38 to $44.58 per barrel in the international market. Prices have trended downwards in the past two weeks as a result of increased shale oil supply by the United States.
The Organisation of Petroleum Exporting Countries, OPEC, disclosed in a statement that the price of OPEC basket of 14 crudes stood at $44.58 a barrel on Friday, compared with $44.38 the previous day.
The OPEC Reference Basket of Crudes, ORB, is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Zafiro (Equatorial Guinea), Rabi Light (Gabon), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).
However, the prices of Brent and WTI dropped from over $47 and $46 to $46.98 and $44.33 per barrel respectively. Oil prices were slightly pressured as the continued expansion in US Shale was seen as obstructing OPEC’s efforts to stabilise the saturated markets.
West Texas Intermediate, WTI, for July delivery, which expires Tuesday, was at $44.75 a barrel on the New York Mercantile Exchange, up one cent. Total volume traded was about 12 percent below the 100-day average.
The contract gained 28 cents to $44.74 on Friday. Brent for August settlement advanced 6 cents to $47.43 a barrel on the London-based ICE Futures Europe exchange, after dropping 1.6 percent last week. The global benchmark crude traded at a premium of $2.45 to August WTI.
Both benchmarks are down some 13 percent since late May, when producers led by the OPEC extended a pledge to cut output by 1.8 million barrels per day (bpd) for an extra nine months.
According to the Energy Information Administration, the data show U.S. drillers increased the rig count by six to 747 last week, the highest level since April 2015, according to Baker Hughes. American crude production has expanded to 9.33 million barrels a day.
A research analyst at Forex Times, FXTM, Lukman Otunuga, said: “A stabilizing US dollar complimented the downside with sellers sending prices towards $44.50. The tale of OPEC versus US Shale is starting to feel like an ongoing battle of attrition with the champion taking the spoils.
“From a technical standpoint, WTI Crude remains in the bears’ territory on the daily charts and a break below $44 should entice sellers to target $43.”
Punch with additional report from Vanguard