ABUJA: Nigeria is assuming an oil price of $42.5 per barrel and output of 2.2 million barrels per day (bpd) in 2017, the budget minister said on Monday as he outlined the country's three-year fiscal plan.
The blueprint expects both production and prices to rise each year up to 2019, and that the naira currency will recover and settle at 290 per dollar, according to the presentation by Udoma Udoma.
OPEC member state Nigeria's economy has been devastated by falling crude prices and attacks on oil and gas facilities in the southern Niger Delta energy hub that have cut oil production from 2.2 million bpd to 1.5 million since January.
Udoma told a forum in the capital Abuja that projections for 2018 and 2019 were $45 and $50 a barrel and output of 2.3 million and 2.4 million bpd, respectively.
Bismark Rewane, economist and CEO of Lagos consultancy Financial Derivatives, described the oil price projections as conservative but highlighted the risk of further attacks in the Niger Delta.
"What is the plan to fund the (budget) gap if production falls?" he asked.
Udoma said "a significant increase in non-oil revenue receipts" was projected for 2017 to 2019 as the economy gradually recovered and tax collection improved.
Crude sales currently account for around 70 percent of government revenue and 90 percent of foreign earnings in Africa's biggest economy.
STRONGER NAIRA?
Udoma said currency assumptions for the 2017-2019 period were for a steady naira/dollar rate of 290. That compared with a rate of 313 on Monday afternoon.
The West African country has budgeted for a record 6.06 trillion naira ($19.64 billion) of expenditure this year, of which he said 2.123 trillion naira had already been allocated.
The 2016 budget, signed into law in May, assumes oil production of 2.2 million barrels per day at a price of 38 dollars a barrel.
Crude prices have rallied in the last few weeks in part due to the impact of the Nigerian attacks on global supply. But Brent crude futures were trading at $44.86 a barrel at 1334 GMT, their lowest since May 11, amid concerns about a glut.
The central bank floated the naira in June after removing a peg of 197 per dollar it had held for 16 months. Since then, the currency has hit all-time lows.
Udoma said value-added tax (VAT) receipts were expected to increase by around 42 percent in 2017. At 5 percent, Nigeria's VAT rate is among the lowest in the world.
Earlier this year, the government said it was considering changes to the tax regime.
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