The federal government plans to finance the N3.52 trillion deficit in the 2018 budget with revenue from crude oil sales and non-oil sources.
According to the medium term expenditure framework (MTEF) and fiscal strategy paper (FSP), 43.2 percent of funds are projected to come from oil revenue, while 56.8 percent is to be earned from non-oil sources.
Data from the MTEF and FSP show that planned expenditure for 2018 is pegged at N8.6 trillion as against an estimated revenue of N5.65 trillion, resulting in a shortfall of approximately N3.52 trillion.
According to the document, the FG’s decision to shore up the deficit with oil revenue is benchmarked against rising crude oil prices.
Oil benchmark for 2018 is estimated at $53 per barrel, up from the $44. 5 per barrel in the 2017 budget, with prices averaging about $49. 9.
“Crude oil prices rose by 8% in the first quarter of 2017, averaging almost $53 per barrel,” the report read.
“Prices are projected to range from $50 to $60 per barrel in 2018 as the market regains balance, with shale production limiting larger price gains.
“The price of Nigeria’s Bonny Light crude oil price rebounded from an average of $44.08 in the international oil market in 2016 to about $51.5 in the first half of 2017.”
However, the market price declined by $4.21 from $54.98 in January 2017 to $50.77 in May, the document said.
As part of an overarching strategy to lower debt service burden and free up more fiscal space for the private sector, the document also said plans are in place to maintain deficits “within sustainable limits,” with debt financing restructured in favour of foreign financing.