DG, Budget Office, Bright Okogu

By Ndubuisi Francis 

The current price of crude oil in the global market does not pose a threat to the 2012 budget, the Director General, Budget Office of the Federation (BOF), Dr. Bright Okogu, has said.

He allayed fears that in the short term, the slide from $120 a barrel earlier in the year to below $83 per barrel Monday  in the international market, occasioned largely by the Euro zone debt crisis, could have a negative impact on the implementation of the budget and put pressure on the Central Bank of Nigeria (CBN) to devalue the naira.

Okogu, who spoke with THISDAY, said the 2012 budget was predicated on a crude oil benchmark of $72 per barrel, based on a projected production of 2.48 million barrels per day.
Although oil is still selling at $10 or 14 per cent higher than the budget benchmark, it is uncertain if Nigeria is meeting its production target for the year, as crude oil theft in oil-producing areas has hampered the country’s capacity to meet the projected production figure.

Okogu added that with the slump in the price of oil in the world market, what the country needed was to be proactive and prudent in the management of its resources.

According to him, a few days ago, Nigeria’s crude was going for about $94 per barrel, which was still above the $72 benchmark, noting that if the price remains above the benchmark and the volume of production is met, cash flow would be guaranteed and there should be no cause for alarm.

The DG, whose position did not contrast with that of the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, added that with reasonably comfortable foreign reserves standing at about $37 billion,  what was paramount is for prudent management of the nation's resources to guard against exogenous shocks.

She also disagreed with the view in some quarters that the naira should be devalued as a result of falling oil prices, adding that as long as the slump was not below the budget benchmark, devaluation might not be necessary. 

At the last Federal Executive Council (FEC) meeting, the Minister of Information, Labaran Maku, had quoted Okonjo-Iweala as warning against the possible slide into recession as a result of the falling price of oil.

The finance minister had sued for caution in the management of the nation’s resources in the likely event of a recession, adding that she was making adequate preparations towards mitigating the likely effects of oil prices falling below the budget benchmark.

The Ministry of Finance has also clarified that contrary to some media reports which had suggested that the immediate-past board of the Securities and Exchange Commission (SEC) was forced to wind up against its will, the board made no request for an extension of its tenure.

“In fact, the board was commended for its meritorious service when the statutory period of its mandate came to an end. This clarification is being made to set the records straight,” a statement issued Monday  by Paul C. Nwabuikwu, the minister’s media aide, said.