Nigeria’s
fiscal risks have become elevated as the retreat of oil prices is bringing them
closer to the break-even point at which the Federal and State government
budgets become untenable.
“Nigeria’s
low levels of accumulated oil windfall savings imply that its oil-price
vulnerability kicks in at a much higher threshold than the official oil price
benchmark suggests,” said Standard Chartered analysts led by Samir Gadio, head
of the bank’s Africa Strategy and FICC Research, in a recent report.
The
2014 Nigerian budget is based on a benchmark oil price of $77.5/ barrel;
however any price cushion is eroded from the unrealistic production assumption
of 2.3 million barrels per day, as output has been running close to the 1.9m
bpd mark.
Nigeria’s
benchmark Bonny light crude oil traded at $97.9 per barrel on September 12,
down 14 percent from $111.9 per barrel in May, according to data from the
Central Bank (CBN).
The
Federation Account Allocation Committee (FAAC),
