Market News

Nigeria said Wednesday it aims to produce 1.88 million barrels per day of crude oil next year and the budget will be based on the benchmark price of $57 per barrel, calling it a  "very conservative" output goal as the country's economy struggles.

Africa's most populous country has been hit hard by the coronavirus pandemic, insecurity and a slump in global oil prices vital to its petroleum-reliant economy.

The government said Wednesday that a Senate committee had approved spending plans for the next three years, called the Medium-Term Expenditure Framework (MTEF), which forecasted gross domestic product growth of 4.2 per cent and inflation of 13 per cent for 2022.

The upper house also gave its nod for daily crude oil production of 1.88 million barrels per day (mbpd) for next year, 2.23 mbpd for 2023, and 2.22 mbpd for 2024  "in view of an average 1.93 mbpd over the last the years".

Those figures are an increase from 1.47 mbpd oil production this year, when the budget was based on $40 per barrel.

The upper house said that  "a very conservative oil output benchmark has been adopted for the medium term in order to ensure greater budget realism".

The Senate committee recommended the MTEF, saying it was  "designed deliberately to minimise the adverse socio-economic consequences of the unabating Covid-19 pandemic and other crises peculiar to our country".

The estimates were considered by the Senate ahead of the 2021 appropriation bill being presented by President Muhammadu Buhari later in the year.

While economic growth has bounced back after being hit by the pandemic, insecurity, kidnapping and criminal attacks have surged this year in northwest and central states and food inflation remains stubbornly high.

Annual inflation stood at 17.01 per cent in August, driven largely by the rising cost of food.

Nigeria has been seeking local and external loans to fund its 2021 budget, execute critical infrastructure projects, fight Covid-19 and combat growing insecurity.

Last week, Buhari sought parliamentary approval for nearly $5 billion in additional external borrowing.