2 THURSDAY , DECEMBER 7 , 2017
Vox pop
Should National Assembly have retained the $ 45 oil benchmark for 2018 budget ?
• Odilim Enwegbara ( An Abuja-based development economist )
Looking at the events of the past years and the great crash in oil price at the world market a few years ago , one would have had no option but to support the executive for using $ 45 as its benchmark for the 2018 budget .
The benchmark has become a tool in the hands of government during budget presentations . It is normal to wave off the unexpected effect of the crash in the price of oil in the international market and the resultant effect of such a crash and distortion it caused in the past . A wise man they say saves for the rainy day . Thus , if the National Assembly had adopted the $ 45 as 2018 budget benchmark , we would definitely have had more money in the Excess Crude Account and our External Reserves will increase . This will boost our image and provide more money for the foreign exchange market among other things .
This will definitely increase the value of naira . Windfalls do come , but most African countries routinely mismanage them . Past regimes in Nigeria and the National Assembly have shown us how financial indiscipline and recklessness could thrive during windfalls . A case study is what happened during President Goodluck Jonathan ’ s regime . Apart from the windfall being looted ,
• Uche Uwaleke ( Associate Professor of Finance and Head of Banking and Finance Department , Nasarawa State University ) have been an advocate of a $ 50
I per barrel as benchmark because we need a lot of money . We can take it up to $ 50 because there is no sign that the price of oil will go anywhere below $ 50 in 2018 . I want the National Assembly to also increase the exchange rate . We must not allow this N305 being proposed by the executive ; it shouldn ’ t be anything below N350 to $ 1 dollar . N305 is very low remembering that in 2018 , as a country , we are going into election mode .
A lot of money will be pumped into the system . Most of the money politicians are hiding will be pumped into the system which means that there is going to be a lot of pressure on the United States dollar . We may have the dollar going for N380-N450 . Why then give it out for N305 ? What do we have at the moment ? It is around N350 to N357 to a dollar in the parallel or black market as it were .
• Yemi Oshifodunrin ( Ogun State chairman , Nigeria Association of Small and Medium Enterprises )
the country ’ s reserves were depleted and shared among the executive and the parliament .
While I will advise the National Assembly to stick to the $ 45 benchmark for the 2018 budget , I will also advise the executive to properly manage any accrual in the ECA for the development of this great country . Let us remember a Yoruba adage which says , “ One does not use the ten fingers to eat at the same time .”
It will be recalled that during the consideration of the 2017 budget proposals , the legislators had jerked up the oil price benchmark proposed by the executive from $ 42.5 per barrel to $ 44.5 per barrel , an action which took a great deal of time to get the consent of the executive .
The arguments in favour of an increase appear strong and persuasive and on this score , the lawmakers will most likely get the support of the state governors for obvious reason : an increase will translate to more money for constituency projects and increase allocations to states and local government areas .
• Tee Thompson ( Managing Director , African Trade Business Centre )
It is good that the National Assembly decided to increase the benchmark to $ 47 per barrel because I strongly believe that oil prices would increase . In fact , it would not have been out of place to have a $ 55 per barrel as the benchmark .
Nigeria has been a pacesetter in budget projections . When you look at 2015 , Nigeria was projected to have posted a better Gross Domestic Product until we blew it . When compared with some other economies , Nigeria has oftentimes made budgets with low projections . I think
think we should look at the bigger
I picture , and this picture is that we are heading for a precarious situation . Everybody has signalled the death sentence for the oil industry . I don ’ t know why Nigeria should still be fixated on having an oil benchmark .
Where is Nigeria heading for ? We all know there is no future for oil again . We must conserve our money in capital projects and infrastructure and not on uncertain oil .
As far as I am concerned , we may put it at $ 42 per barrel and we can then amass surplus revenue and keep as a reserve . We must commit the excess to developmental projects and infrastructure .
Our infrastructure and social amenities are comatose . These are the things we need to fix . We are presently at the growth rate of 1.5 per cent of our
Also , a higher oil price benchmark will narrow the budget deficit and reduce the size of the borrowing required to finance the deficit .
Russia , one of the world ’ s biggest energy exporters , has adopted a conservative oil price of $ 40 per barrel for the country ’ s 2017- 2019 national expenditure plans .
So , with respect to the oil price , the proposed $ 45 per barrel should have been retained . As the saying goes , “ It is better to be conservative and be surprised on the upside than be too optimistic and end up disappointed .”
Nigeria still has the opportunity to do better whenever there is an increase in the price of oil in the international market .
The benchmark could go up to a minimum of $ 55 . What we should hope and pray for is that Nigeria should take advantage of these God-given resource while we still have it and can use it to better the lot of our people . We must also use our human capital to create opportunities within and outside the oil sector through diversifying the economy .
Nigeria has one of the smartest people in the world . Our people are also innovative . They bring ingenuity to the process by using the chemical components and by looking at the trends in the oil sector . I believe with time , the benchmark could be increased to a minimum of $ 55 per barrel as the price of crude increases .
We should also explore new markets for our products . I strongly believe that $ 55 benchmark will be okay even considering global oil price .
A couple of things make me optimistic . Nigerian is a giant and sets the trend . Secondly , as it relates to other countries , it can lobby OPEC to increase its market share . Considering our peculiar circumstances , we could benefit from this .
I also believe that with the reforms going on and the move to make the Nigerian National Petroleum Corporation more transparent in the discharge of its functions , things can only get better .
Gross Domestic Product .
The experts said that if we are able to fix power in the country , the rate of our GDP growth will rise to about 10 per cent . The ominous event of the oil becoming obsolete is just around 2035 . This is just about 15 years away .
The government must therefore begin to look at the bigger picture and begin to look for alternative sources of increasing revenue . At this stage , we have to divert 50 per cent of our income on reviving the non-oil sector before the inevitable day comes .
• Bisi Sanda ( Economic analyst , retired Senior Partner , Ernst and Young )
Compiled by : Success Nwogu Samuel Awoyinfa , Ifeanyi Onuba and Olaleye Aluko
2
THURSDAY, DECEMBER 7, 2017
Vox pop
Should National Assembly have retained
the $45 oil benchmark for 2018 budget?
I
•Odilim Enwegbara (An Abuja-based
development economist)
have been an advocate of a $50
per barrel as benchmark because
we need a lot of money. We can take
it up to $50 because there is no sign
that the price of oil will go anywhere
below $50 in 2018. I want the
National Assembly to also increase
the exchange rate. We must not allow
this N305 being proposed by the
executive; it shouldn’t be anything
below N350 to $1 dollar. N305 is very
low remembering that in 2018, as a
country, we are going into election
mode.
A lot of money will be pumped
into the system. Most of the money
politicians are hiding will be pumped
into the system which means that
there is going to be a lot of pressure
on the United States dollar. We may
have the dollar going for N380-N450.
Why then give it out for N305?
What do we have at the moment? It
is around N350 to N357 to a dollar
in the parallel or black market as it
were.
L
ooking at the events of the past
years and the great crash in oil
price at the world market a few years
ago, one would have had no option but
to support the executive for using $45
as its benchmark for the 2018 budget.
The benchmark has become a tool in
the hands of government during budget
presentations. It is normal to wave off
the unexpected effect of the crash in the
price of oil in the international market
and the resultant effect of such a crash
and distortion it caused in the past. A
wise man they say saves for the rainy
day. Thus, if the National Assembly
had adopted the $45 as 2018 budget
benchmark, we would definitely have
had more money in the Excess Crude
Account and our External Reserves will
increase. This will boost our image and
provide more money for the foreign
exchange market among other things.
This will definitely increase the value
of naira. Windfalls do come, but most
African countries routinely mismanage
them. Past regimes in Nigeria and the
National Assembly have shown us how
financial indiscipline and recklessness
could thrive during windfalls. A
case study is what happened during
President Goodluck Jonathan’s regime.
Apart from the windfall being looted,
•Tee Thompson (Managing Director,
African Trade Business Centre)
I
t is good that the National Assembly
decided to increase the benchmark to
$47 per barrel because I strongly believe
that oil prices would increase. In fact, it
would not have been out of place to have
a $55 per barrel as the benchmark.
Nigeria has been a pacesetter in budget
projections. When you look at 2015,
Nigeria was projected to have posted a
better Gross Domestic Product until we
blew it. When compared with some other
economies, Nigeria has oftentimes made
budgets with low projections. I think
I
•Yemi Oshifodunrin (Ogun State chairman,
Nigeria Association of Small and Medium
Enterprises)
the country’s reserves were depleted
and shared among the executive and the
parliament.
While I will advise the National
Assembly to stick to the $45 benchmark
for the 2018 budget, I will also advise
the executive to properly manage any
accrual in the ECA for the development
of this great country. Let us remember
a Yoruba adage which says, “One does
not use the ten fingers to eat at the same
time.”
I
t will be recalled that during the
consideration of the 2017 budget
proposals, the legislators had jerked
up the oil price benchmark proposed
by the executive from $42.5 per barrel
to $44.5 per barrel, an action which
took a great deal of time to get the
consent of the executive.
The arguments in favour of an
increase appear strong and persuasive
and on this score, the lawmakers will
most likely get the support of the
state governors for obvious reason:
an increase will translate to more
•Uche Uwaleke (Associate Professor of money for constituency projects and
Finance and Head of Banking and Finance increase allocations to states and local
government areas.
Department, Nasarawa State University)
think we should look at the bigger
picture, and this picture is that we
are heading for a precarious situation.
Everybody has signalled the death
sentence for the oil industry. I don’t
know why Nigeria should still be fixated
on having an oil benchmark.
Where is Nigeria heading for? We
all know there is no future for ����������)]�����Ё���͕�ٔ���ȁ����䁥������х�)�ɽ����́�������Ʌ���Ս��ɔ�������Ё��)չ���х�������)́��ȁ�́$���������ɹ����ݔ����)��Ё�Ё�Ѐ��ȁ��ȁ���ɕ������ݔ����)ѡ�������́������́ɕٕ�Ք���������)�́��ɕ͕�ٔ��]�����Ё�����Ёѡ�)�ፕ�́Ѽ���ٕ������х���ɽ����́���)���Ʌ���Ս��ɔ�)=��)���Ʌ���Ս��ɔ)���)ͽ����)�����ѥ�́�ɔ�����ѽ͔��Q��͔��ɔ�ѡ�)ѡ���́ݔ������Ѽ���ก]���ɔ��ɕ͕�ѱ�)�Ёѡ���ɽ�Ѡ�Ʌє����ĸԁ��ȁ���Ё������)�ͼ���������ȁ�����ɥ����������ɬ�ݥ��)���ɽ܁ѡ���Ց��Ё������Ё����ɕ�Ս��ѡ�)ͥ锁���ѡ�����ɽݥ���ɕ�եɕ��Ѽ��������)ѡ��������и)I��ͥ����������ѡ��ݽɱ��é������Ё���ɝ�)�����ѕ�̰���́����ѕ�������͕�مѥٔ����)�ɥ������������ȁ���ɕ����ȁѡ����չ���e�(���ܴ����䁹�ѥ��������������ɔ�����̸)M���ݥѠ�ɕ����ЁѼ�ѡ�������ɥ����ѡ�)�ɽ��͕����ԁ��ȁ���ɕ��͡�ձ����ٔ�����)ɕх������́ѡ��ͅ她�����̰��q%Ё�́���ѕ�)Ѽ�������͕�مѥٔ������������ɥ͕�����ѡ�)��ͥ���ѡ������ѽ����ѥ���ѥ������������)��ͅ�����ѕ���t)9���ɥ���ѥ�����́ѡ��������չ���Ѽ���)���ѕȁݡ���ٕȁѡ�ɔ��́������ɕ�͔����ѡ�)�ɥ�������������ѡ����ѕɹ�ѥ�������ɭ�и)Q����������ɬ���ձ��������Ѽ��)�����մ������Ը�]��Ёݔ�͡�ձ������)�����Ʌ䁙�ȁ�́ѡ�Ё9���ɥ��͡�ձ��х��)��م�х������ѡ�͔������ٕ��ɕͽ�ɍ�)ݡ����ݔ��ѥ�����ٔ��Ё���������͔��ЁѼ)���ѕȁѡ����Ё�����ȁ��������]������)��ͼ��͔���ȁ�յ�������х��Ѽ��ɕ�є)������չ�ѥ�́ݥѡ����������ͥ���ѡ�����)͕�ѽȁѡɽ՝����ٕ�ͥ�她��ѡ���������)9���ɥ����́�������ѡ��͵��ѕ�Ё���������)ѡ��ݽɱ���=�ȁ��������ɔ���ͼ�����مѥٔ�)Q��䁉ɥ��������ե��Ѽ�ѡ���ɽ���́��)�ͥ���ѡ��������������������́������)���������Ёѡ���ɕ��́���ѡ������͕�ѽȸ�$)�����ٔ�ݥѠ�ѥ����ѡ���������ɬ���ձ����)���ɕ�͕��Ѽ��������մ������ԁ��ȁ���ɕ�)�́ѡ���ɥ��������Ց�����ɕ�̸͕)]��͡�ձ����ͼ������ɔ���܁��ɭ��́���)��ȁ�ɽ�Ս�̸�$���ɽ���䁉����ٔ�ѡ�Ѐ���)�������ɬ�ݥ���������䁕ٕ�����ͥ��ɥ��)������������ɥ���)�����������ѡ���́����������ѥ���ѥ��)9���ɥ����́������Ё����͕�́ѡ���ɕ���)M������䰁�́�Ёɕ��ѕ́Ѽ��ѡ�ȁ��չ�ɥ�̰)�Ё���������=A�Ѽ����ɕ�͔����)��ɭ�Ё͡�ɔ��
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