The refusal of Russia and Saudi Arabia to cooperate in warding off rising pressure on global oil price has piled further pressure on the Federal Government’s capacity to implement the N10.59 billion budget approved for 2020.
Russia’s refusal to commit to any agreement with the OPEC-bloc mirrors its unwillingness to yield more ground to the US shale. The combination of this action and the market destabilizing impact of the Coronavirus pushed global oil price further down by 25% as at March 9th.
The benchmark Brent crude fell to $36.32. Whereas FG had pegged the 2020 budget implementation on the possibility of oil revenue tied around 2.18 million bpd at benchmark $57 per barrel, current global reality weigh deeply against that projection.
The Minister of Finance, Zainab Ahmed, said yesterday that she would be meeting with President Muhammad Buhari and the leadership of both NNPC and CBN to find a quick fix to the plummeting revenue pipeline.
The foregoing scenarios have stern implications for fiscal implementation. It will see borrowing rise, and resources from the external reserve being pulled further may affect the value of the Naira with negative impact on the cost of importation for manufacturers sourcing raw materials from overseas.
Plans to erect new and renovate old infrastructure will take a hit too. Since entrepreneurs depend on strong infrastructural capital – transport system, power, broadband etc – to thrive, the incapacity of the Federal Government to build and renovate in the face of economy diversification will put pressure on the country’s entrepreneurs ecosystem.