Dec 17, 2014 11:16 AM

Nigerian budget slashed by slumping oil prices

The Associated Press

ABUJA, Nigeria (AP) Nigeria's finance minister presented a 2015 budget of $23 billion to parliament on Wednesday, slashed by nearly $3 billion to accommodate slumping oil prices.

Minister Ngozi Ikonjo-Iweala said she expects government revenue of $19.7 billion off growth of 5.5 percent next year, down from an earlier projection of 6.35 percent.

She said she has tried to make up for dropped oil prices by raising non-oil revenue. President Goodluck Jonathan had in September proposed a 2015 budget of about $26 billion based on oil prices of $78 a barrel. Ikonjo-Iweala said the new budget is based on an assumption of $65 a barrel and production of 2.27 billion barrels a day in Africa's biggest oil producer.

But economist Bismarck Rewane of Financial Derivatives Consultancy in Lagos said the country is pumping only about 2 million barrels a day and suffers massive losses from oil theft.

"This budget points to the fact that this country is a non-oil country," Ikonjo-Iweala told legislators. "The key is that we focus on diversification."

While income from agriculture of other industries has grown, the government depends on oil for about 80 percent of its revenue and 95 percent of foreign reserves.

The minister said food prices have remained stable despite an 8 percent devaluation of the naira currency earlier this month. The naira slid Friday to an all-time low of nearly 190 to the dollar.

Ikonjo-Iweala said in an interview last week that the country's food import bill has dropped by nearly $1 billion in the past three years because of growth in the agricultural sector, especially the rice crop and substituting locally grown cassava for wheat imports.

Nigeria is preparing for Feb. 14 elections expected to be the most closely contested since decades of military dictatorship ended in 1999. Jonathan, 57, is challenged by former military ruler Gen. Muhammadu Buhari, 72, the candidate of a four-party coalition.


Faul reported from Cambridge, England.


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