Coronanomics (13) - Nigeria: The Budget, The People and Poverty

Friday, June 19, 2020 / 05:20 AM / by Proshare Content/ Header Image Credit:  EcoGraphics

The restrictions in the movement have negatively affected the demand for oil and have caused uncertainty in the global oil market. During the crisis period, the WTI traded as low as negative $37.63 per barrel in April while the Brent crude oil price fell remarkable too as low as $15.98 per barrel.

To meet its current economic realities and to avoid any further shocks that can occur as a result of volatility in oil price, the Nigerian budget, as well as the  oil price, was revised downwards.

The budget benchmark for oil was revised to $30 per barrel from $57 per barrel while it was announced by the budget minister that the capital expenditure will be cut by 20% and recurrent expenditure will be reduced by as much as 25% in the revised 2020 budget.

Table 18: Nigeria's 2020 Budget Summary and Adjustments-Rethinking Reality

Some of the consequences of the reduction in the Nigerian budget include the reduction in revenue and expenditure which could lead to an increase in borrowing, decline in GDP growth rate and eventually a recession in the economy.

Illustration 15: Nigeria's Budget 2020-Recessionary Troubles Ahead

The Nigerian economy is on the verge of a macroeconomic crisis which may eventually lead to a recession. The fall in oil prices will affect the overall outlook for the economy in both 2020 and Q1 2021 (see illustration 15 above).

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