The ongoing controversy over oil price benchmark for budget 2013 has attracted international attention with Standard Chartered Bank urging Nigeria to retain the $75 oil benchmark as submitted by President Goodluck Jonathan.

Mr Razia Khan, the Regional Head of Research of the bank, who gave the advice in a confidential briefing obtained by the Nigerian Tribune, expressed fears that a higher benchmark posed serious threat to the Nigerian economy.

The economist also expressed worries about the budgeted oil output of 2.5 million barrels per day due to what he called lack of exact figures and data on investment and output in the nation‘s oil sector.

“Of greater concern is the suggestion that there might be an attempt by the House to raise this to USD 80/bbl.  In our view, given global risks, and Nigeria’s ongoing fiscal and export dependency on a single commodity, the priority for Nigeria should be increasing its rate of savings,” Mr Khan said.

“Were oil prices to fall, Nigeria would currently be left very vulnerable, with no sound mechanism for being able to smooth spending, let alone provide a counter-cyclical boost to the economy. The Sovereign Wealth Fund, while encouraging, is not yet sizeable enough to create a sound buffer against external shocks.  There is, therefore, a need for much more fiscal conservatism, and the signals from the House are a considerable concern,” he canvassed.

 Khan further noted that the fall in the share of recurrent spending to 68.7 per cent of the budget, from 71.47 per cent  “is a step in the right direction and indicative of the authorities’ desire to gradually boost the share of capital expenditure.

“It is especially encouraging to see the funds earmarked for agriculture, as this could be a game changer for Nigeria, if the country succeeds in boosting agricultural productivity. In real terms, it signals the ongoing attempt to achieve fiscal consolidation.”

Comments (2)

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written by evn, October 16, 2012

Which concern Oyinbo for this matter. Oga Jonathan I beg shine your eye. Nigeria no dey under colonial master again abi una won start 3rd salvery. Oga Jona small small oooooooo

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written by Roger, October 16, 2012

Is your brother among the robbers in the House? The worlsd over every country is cutting spending, yet your brothers in the House are insisting on $80. all this fighting is bacuse they have been asked to hands off project execution. We understand their plight that they won't get extra money since they seized to be contractors. The advice is apt adn should be deeded if Nigeria don't want to go through Greec or Spain experience. Does Qatar, Saudi Arabia or Venezuela spend all their money at a time? I know Tambuwal and his cohorts are illitrate when it comes to economic indices. Afterward, the former CBN Governor who speareheaded the Northern agenda of power must return to the north, was using O Level Economic By lawal has hi reference point.

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