"What you do if your budget revenue is below expectation is to... conserve and prioritise and that's exactly what we have agreed to do.
Nigeria's Minister of Finance and Coordinating Minister of the Economy, Wale Edun, on Wednesday said that the government has outlined key strategies to address the impact of falling oil prices and budget shortfalls on the Nigerian economy.
Mr Edun made the disclosure at an Investors' Forum held on the sidelines of the World Bank/IMF meetings holding in Washington D.C.
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The minister said the government would prioritise some forms of payments, diversify the economy, improve oil production, maximise costs, and stay within the constitutional threshold for budgetary allocations.
There have been concerns in recent weeks that with plummeting crude oil prices, the nation's budgetary provisions--pegged at crude oil benchmark of $75 per barrel--could be threatened and disrupted ahead of the year.
Oil prices touched below $70 a barrel earlier in the month as Brent is expected to hover around $60 a barrel in the second half of the year. Goldman Sachs estimated that Brent could drop to the low-to-mid $60s by the end of 2026 should OPEC and allies increase supply.
Speaking about the government's plans Wednesday in Washington, Mr Edun said: "Everybody can see that our budget was based on 2 million barrels a day at $75 per barrel.
"What you do if your budget revenue is below expectation is to... conserve and prioritise and that's exactly what we have agreed to do.
"Number one is to ensure that we maintain fiscal congruence; we get priority payments; the salaries, the pensions and other statutory payments, the debt service, the security payments. So we will prioritise."
He added that the mandate of the NNPC and its new management is to increase production by helping to boost revenue no matter the price and save cost.
"We are also diversifying the economy away from oil revenues," the minister added.
He explained that Nigeria now boasts of about 1.2 million barrels per day in refining capacity, which gives support to productions in petro-chemicals to serve industrial purposes, boost agriculture, improve pharmaceuticals, support textile production, aid building materials, among other productive engagements that can support the economy. He said all of these are also tied to the market pricing of petroleum products, which supports energy sufficiency.
"The other aspect is that we are committed to stabilising the economy so that the private sector will find it attractive to invest. And so the way to growth is through investment; increased productivity that creates jobs, and by that, reduces poverty," he explained.
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"Optimisation of assets is another way to closing the gap in the budget."
Mr Edun said there is tremendous interest in investing in Nigeria and the government will do all it can in terms of structure, incentive, enabling business environment so that the private sector can invest and pay taxes.
In terms of budget deficit, the minister said plans are underway to keep the threshold within the limit of constitutional provisions as outlined in the Fiscal Responsibility Act.
Tariff war
Speaking further on Wednesday, the minister said Nigeria doesn't suffer from the reciprocal tariff regime like other vulnerable economies due to the structure of its exports to the United States.
Earlier in the month, Mr Edun said the country will not be severely affected by the United States' decision to impose a tariff on certain imports from countries without a trade agreement, due to the dominance of crude oil and mineral products in its US -bound exports.
"It's not too bad," Mr Edun said at the inaugural Corporate Governance Forum organised by the Ministry of Finance Incorporated in Abuja. "Oil minerals are excluded by America from being in any way sanctioned with tariffs."
Also speaking at the forum, Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, explained that the "difficult reforms" embarked upon by the Nigerian government have begun to yield fruits.
