Chibisi Ohakah, Abuja
The Institute of Chartered Accountants of Nigeria (ICAN) has said that whereas the projections for crude oil price and production as captured in the proposed budget were very ambitious, and that the Federal Government budget estimate for 2019, may run below target. On December 19, 2018, President Muhammadu Buhari unveiled a federal budget of N8.83 trillion for the 2019 fiscal year.
The 2019 figure is about N300 billion lower than the N9.1 billion figure of 2018 fiscal year. The 2019 budget proposal was based on an oil production estimate of 2.3 million barrels per day and an exchange rate of N305 to a dollar, while the real gross domestic product (GDP) growth rate was put at 3.01% and inflation rate at 9.98%
President of the Institute, Alhaji Rasaq Jaiyeola, who spoke during the inauguration of the maiden edition of the official journal of ICAN, Abuja District Society, in Abuja, forecasted that the budget would not meet its target.
“The new budget has been introduced, which is a bit lower than that of last year. The government called it a budget of consolidation and has tried to introduce some measures, but there is a lot of improvement to be made.
“I have a problem with the projection in the budget as regards the volume of crude oil that will be produced. The budget is putting it at 2.3 million barrels per day, which in my opinion is very, very ambitious given the various parameters which one should normally consider before taking such a decision,” he said
The ICAN president said he would be more inclined to look at something within the range of 1.9 to two million barrels per day, as the 2.3mbpd projection in itself is a problem.
“For the oil price that was used, I also believe that they (government) have not been too conservative about it. There’s going to be a problem in achieving the price that has been used.
“Overall, even with the rate of the growth of the GDP, what has been projected given the 1.9 figure that has been achieved before, I believe that what has been projected in the budget is also on the high side.
“So, I think we should be more conservative in our budget and I will say that the budget is not likely to achieve what has been targeted,” the ICAN boss stated.