Africa's biggest economy Nigeria slashes budget as oil price plummets

Oil accounts for 83% of the west African country's exports, but dropping prices are putting producers around the world on edge.

Nigeria—Africa’s biggest oil producer—is being forced to tighten its belt because of the slide in oil prices, officials said Sunday.

The continent’s largest economy is reviewing its fiscal and monetary policies to deal with the predicted fall in revenues after oil prices fell by a third since June.

Finance Minister Ngozi Okonjo-Iweala said spending plans made on an oil price benchmark of $78 dollars a barrel for 2015 were being reviewed downward to $73 dollars a barrel.

Oil prices rose slightly to $75.82 a barrel for West Texas Intermediate Friday after falling to a four-year low, with Kuwaiti crude selling for $71.40.

Okonjo-Iweala said the adjustment “will mean a drop in projection in gross oil revenue from 7.287 trillion naira ($42.6 billion) to 6.833 trillion naira ($39.9 billion).”

More than two-thirds of the country’s revenue is derived from oil, she said.

Okonjo-Iweala said the prediction of the country’s oil production of 2.27 million barrels per day remains unchanged but? “we are going to see the expenditure of the federal government this time go down from about 4.8 trillion naira to 4.6 trillion naira.”

She said oil accounts for 83% of Nigeria’s exports.

“The way we propose to manage the situation is to adopt a basket of measures, fiscal measures on the revenue side and on the expenditure side and this will be complemented by appropriate monetary policies,” Okonjo-Iweala said.

She ruled out printing more money as a way out of the situation, warning of the risk of inflation.

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