Nigeria faces N1.3 trillion spending gap at $70 oil

Nigeria faces the negative prospects of a N1.3 trillion cut in government spending next year, if oil prices trade at an average of $70 per barrel in 2015, unless the government chooses to spike bond issuances and widen the deficit to maintain spending close to this year’s level.

With Brent crude averaging $103 dollars per barrel so far in 2014, Nigeria’s gross Federal Account Allocation Committee (FAAC) budgetary disbursements to the three tiers of government was equivalent to N6.359 trillion between January and October 2014.

Nigeria’s Bonny Light trades at a slight premium to Brent.

Calculations show that