MTEF: FG okays $42 oil benchmark for 2017 budget

•Pegs exchange rate at N290 to $1

THE Federal Executive Council (FEC), on Wednesday, approved the 2017 to 2019 Medium Term Expenditure Framework (MTEF), which recommended that the 2017 budget be predicated on oil price benchmark of $42.5 per barrel and N290 exchange rate to a dollar.

Minister of Budget and National Planning, Udoma Udo Udoma, who stated this while briefing State House correspondents after a regular meeting of FEC, presided over by President Muhammadu Buhari, said the document would consequently be transmitted to the National Assembly for necessary legislative action, as the next three budget would derive from it.

According to him, the MTEF, which was adopted after wide consultation with important stakeholders, highlighted the need for the Federal Governnemt to sustain its efforts at diversifying the economy, as well as creating the enabling environment for business to thrive.

“The Federal Executive Council meeting approve the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (SFP) for 2017 to 2019.

“As you know, the Fiscal Responsibility Act requires the executive to prepare the MTEF and send it on to the National Assembly for consideration and it is on the basis of the MTEFF that the next budget will be fashioned.

“So, in short, we have started the process of preparing the 2017 budget.

“Before the MTEFF was presented to FEC for consideration, there was an extensive consultation with the private sectors, governors, NGOs.

“In the 2017-2019 MTEF, the government intends to intensify efforts in pursuing manpower-driven economy.

“So we intend to intensify effort to diversify the economy, we intend to go on with the implementation of ongoing reforms in public finance, we intend to enhance the environment for ease of business, so as to generate private sector and private investment.

“Let me share with you some of the key parameters and assumptions which will be underpinning the 2017-2019 MTEF.

“Oil price benchmark: We intend to use $42.50 as a reference price in 2017. We are projecting $45 in 2018 and $50 in 2019.

“So we are keeping to the very conservative in terms of the reference price of crude oil, though we are expecting it to go higher than this, but we are keeping to an extremely conservative price scenario.

“In terms of oil production, we are keeping to the same level of this year for 2017 and that is 2.2 million barrels per day; for 2018, 2.3 million barrels per day andfor 2019, 2.4 million barrels per day.

“In terms of the currency, we are using the exchange rate, we are using N290 to $1. We believe that the naira will stabilise and we believe that N290 to $1 is a fair estimate from the Central Bank of Nigeria of what the naira is worth,” he said.

The crude oil benchmark in the current budget is $38, while the official exchange rate is N290 to a dollar.

Speaking further, the minister said government intended to continue to pursue gender sensitive, pro-poor and inclusive social intervention schemes similar to what it was doing in the current fiscal year.

“Our social intervention programmes is going to be sustained. We intend to devote even more resources to critical infrastructure projects just as we did this year.

“So we will continue to spend more on roads, rail transport infrastructure, ports and so on. We intend to focus on plane governance and security and we intend to maintain the zero-based budgetary approach,” he said.

On the projected growth rate of the economy, Udoma noted that government was targeting “in 2017, a three per cent growth rate; 2018 a 4.26 per cent growth rate and in 2019, a 4.04 per cent growth rate.