UPDATE 2-Nigerian leader seeks to lower 2010 budget spending

* President seeks lower expenditure in 2010 budget

* Jonathan wants parliament to revise benchmark oil price

* Parliament to mull supplementary budget

(Adds fresh quote, details)

By Camillus Eboh

ABUJA, June 1 (BestGrowthStock) – Nigerian President Goodluck
Jonathan on Tuesday asked parliament to cut planned spending in
the 2010 budget and revise its key assumptions to reflect a fall
in global oil prices.

Oil’s sudden drop from over $87 to briefly below $70 last
month (CLc1: ) has forced the OPEC member, which depends on oil
sales for more than 80 percent of its government revenue, to
reconsider its expansionary spending plans of 4.6 trillion naira
($31 billion).

The finance ministry warned last month that revenues were
not enough to cover monthly budgetary allocations and could
force Nigeria to use all of its windfall oil savings.

“Recent revenue developments indicate significant shortfalls
in both oil and non-oil revenue, which may well continue for the
rest of the fiscal year, with adverse implications for the
financing of the budget,” Jonathan said in a letter sent to both
houses of parliament.

“On the expenditure side, it is necessary to revise downward
the aggregate level of expenditure from the 4.608 trillion
(naira) approved in the 2010 Appropriation Act,” he added.

But the president also asked parliament to consider a
supplementary budget for debt service and “certain unanticipated
key expenditure items,” such as the 50th anniversary celebration
of Nigeria’s independence coming up in October. Details on the
amount of the budget were not immediately given.

BUDGET ASSUMPTIONS

The 2010 budget, signed into law last month, assumes a
global oil price of $67 a barrel, crude oil production of 2.35
million barrels per day and an exchange rate of 150 naira to the
U.S. dollar.

The finance ministry and the House of Representatives are in
talks to lower the benchmark to as low as $55 a barrel.

“Given the recent drop in international oil prices from $80
a barrel to under $70 a barrel, it is prudent to revise the oil
benchmark price to a more realistic level,” Jonathan said.

Africa’s biggest energy producer saves revenues above the
budget’s oil benchmark figure into an excess crude account, a
pillar of IMF-backed reforms launched in 2003 to help insulate
Nigeria from volatility in global oil prices.

The account has dwindled to less than a quarter of the $20
billion it held three years ago due to monthly withdrawals to
the three tiers of government.

Stock Analysis

(Writing by Randy Fabi; Editing by Nick Tattersall, Ron Askew)

UPDATE 2-Nigerian leader seeks to lower 2010 budget spending