The Minister of Finance, Budget and National Planning, Zainab Ahmed, said on Thursday that the resurgence of COVID-19 pandemic in Europe, may affect the 2021 budget estimate.
She said her ministry did not anticipate the second phase of the pandemic, which has caused the oil price to decline in the international market, while planning the 2021 budget.
The budget was predicated on $40 per barrel. But the current price of crude oil in the market stands at $37.
The Finance minister said the Federal Government “took the safer path” to benchmark the crude oil price in the 2021 budget but the second wave of COVID-19 in Europe threatened the estimate.”
Ahmed stated this on Thursday when she appeared before the Senate Committee on Finance to defend her ministry’s budget.
The Chairman of the panel, Solomon Adeola, had asked the Minister about the contingency plans the Federal Government had put in place to insulate the budget from the shocks of falling oil price.
Responding, the minister said, “The actual projection was $40 per barrel and that is the average price that we projected to be for the year.
“Some of the institutions that are responsible for tracking price of crude oil, actually have crude oil price going as far as $50, $52 per barrel.
“We took a safer path. It seems the second wave of COVID-19 in Europe is affecting us. We are hoping to have clarity as to which direction to take in the next week or two.”
The minister, however, dismissed insinuations that the federal government may increase Value Added Tax again by 2.5 per cent in 2021.
She said, “As for the Finance Bill, we have the draft. There will be no increase in VAT or any form of taxes because we see 2021 as a year of recovery – not only got but businesses as well.”