Falling oil prices to force another benchmark readjustments … Okonjo-Iweala admits growth may slow in 2015

Prices of crude oil in the international markets are getting worse by the day as intermediate price for Nigeria’s Brent is put at $65.50 per barrel in January.
The precarious situation has forced Ngozi Okonjo-Iweala, finance minister and coordinating minister to become less confidence in the economy.
Crude oil prices struck fresh five-year lows in Asia on Tuesday, with analysts forecasting further falls owing to weak demand, a global supply glut and fewer production halts. US benchmark West Texas Intermediate (NTI) for January delivery fell 52 cents to $62.53 while Brent for January eased 69 cents to $65.50 in afternoon trade, nearer the Nigerian budget benchmark of $65. WTI tumbled $2.79 in New York to hit its lowest closing point since late July 2009, while Brent tanked $2.88 in London to its lowest close since September 2009. Nigeria has changed its benchmark twice in the last few weeks, from $78 to $73 and lately to $65. Analysts suggest a more realistic benchmark of $50, with prevailing forecasts that oil prices will continue to fall. Nigeria depends on oil revenue to bankroll its big recurrent expenditure, with its parliamentarians said to be the highest paid in the world.
Okonjo-Iweala said Nigeria is cutting spending on government travel and equipment, and raising taxes on yachts and private planes as oil prices hit five-year lows. The tightening will shrink growth to around 5.3 per cent, delaying some infrastructure, and will force the country to tax a booming informal economy that has long escaped oversight, said Okonjo-Iweala. Tumbling oil prices have put crude producers from Iran to Venezuela on the back foot. Few of those countries are watching oil revenue dwindle at such an inopportune moment as Nigeria. The country’s spending needs are soaring as oil prices move in the opposite direction.

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