1 week ago
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By Adewale Sanyaolu
Nigeria’s economic stability hangs in the balance as concerns mount over the viability of funding the proposed N54.99 trillion 2025 budget, which is anchored on a $75 per barrel oil benchmark.
Fresh indications over the weekend suggest that this fiscal projection could face some turbulence if the United States President, Donald Trump, succeeds in brokering peace between Russia and Ukraine, a development that could disrupt global oil prices and shake Nigeria’s revenue framework.
The Senate, last Thursday, approved the 2025 Appropriation Bill by passing a budget estimate of N54.99 trillion.
President Tinubu initially proposed a N49.7 trillion budget, but increased it to N54.9 trillion on February 5 after reporting additional revenue generated by key agencies.
In letters to the Senate and House of Representatives, read by Senate President Godswill Akpabio, Tinubu detailed the sources of the additional revenue: N1.4 trillion from the Federal Inland Revenue Service, N1.2 trillion from the Nigeria Customs Service, and N1.8 trillion from other government agencies.
In a note of caution to Nigeria titled “Trump Effect on the Nigerian Economy, Director/Chief Executive Officer, Centre for the Promotion of Private Enterprise(CPPE), Mr. Muda Yusuf, warned that if Trump succeeds in ending the Russian-Ukraine war, the prospects for growth in global oil output would be considerably heightened as Russia supplies about 10 mbd of oil to the global oil market.
He added that there is also a good chance that the current sanctions on Russia by the USA may be lifted thereafter as the relationship between the two countries normalises.
In light of the above, he warned that a scenario of a weakening of crude oil prices in the near term is therefore very high.
“In this context, the crude oil price benchmark of $75 per barrel in the 2025 budget may not hold. This would impact the outlook for government revenue and foreign exchange earnings in 2025,”.
According to him, the United States of America (USA) has been the largest oil producer globally for the past six years.
“In 2023, for instance, the USA produced an average of 21.91 million barrels per day, which is about 22 per cent of the global oil production. The USA is, therefore, in a good position to influence global oil output and prices.
“The Trump administration has committed to increasing oil output to reduce energy prices in the US and globally. The country also has the global diplomatic clout to get OPEC to boost oil production.
“To this end, President Trump has signed an Executive Order creating a National Energy Dominance Council to drive the country’s energy dominance agenda.
“Additionally, the Trump administration is committed to moderating the current global geopolitical tension, especially the Russian-Ukraine war, and possibly the Israeli-Hamas war’’, he said.
Yusuf equally posited that the decision of President Trump to opt out of the Climate change agreement (the Paris Accord) also has far reaching consequences for the global oil market.
This, he said, signals less commitment to climate change concerns and the acceleration of more investment in fossil fuels by the USA.
He further noted that the sweeping imposition of trade tariffs on major US trading partners may weaken the global economic growth outlook, dampen global oil demand and depress oil prices.
However, the CPPE CEO reasoned that the upside is that energy prices would drop globally – the price of diesel, PMS Jet fuel, gas among others.
According to him, this would gladden the hearts of many economic players in the country as the transmission effect would be very fast because of the deregulated regime of the oil and gas sector.
English (US) ·