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Olugbemi. Adeyinka Ogunleye
1 week ago
Overview
Venezuela Crisis May Create $10 Billion Hole In FG’s ₦58 Trillion Spending Plan
• Complicates Nigeria’s fiscal fragility, threatens naira stability
• OPEC weighs in as eight members meet over supply cut
Geopolitical developments in Venezuela and the prospect of a major rattle in global oil supply dynamics could exert downward pressure on crude prices and ultimately stress-test the Federal Government’s N58.18 trillion 2026 spending plan.
The crisis, which has triggered a review of projections across key markets and put enormous pressure on the crude market, is subjecting key budget assumptions to scrutiny, with President Donald Trump’s targeted $50 per barrel price no longer an illusion.
The country is expected to raise about $40.6 billion by producing 673 million barrels of crude in 2026 or 1.84 million barrels per day and sell for $64.85 per barrel, though the National Assembly has proposed a reduction of the price benchmark to $60 per barrel.
Some analysts project that oil prices may dip to $50 per barrel, thereby leading to a potential loss of about $10.24 billion. Following the invasion of Venezuela by the U.S. and the capture of Nicolás Maduro, President Trump had said his administration would invest in producing oil from the North American country.
Already, eight major producers, including Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman, yesterday reaffirmed commitment to Organisation of Petroleum Exporting Countries (OPEC)-backed market stability, citing a steady global economic outlook.
With the Federal Government projecting oil revenues as a key pillar of its N58.18 trillion spending plan, stakeholders warn that a faster-than-expected return of Venezuelan oil to global markets could undermine fiscal projections, weaken foreign exchange (FX) inflows and deepen existing revenue challenges.
The concern comes at a time when Nigeria is already grappling with fiscal fragility. The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, earlier disclosed that the Federal Government recorded a revenue shortfall of about N30 trillion in 2025, highlighting the gap between budget expectations and actual inflows.
Naira, which gained N100/$ last year, the strongest in recent years, may face downward pressure in the face of weakened oil market performance.
The 2026 budget framework estimates a total expenditure of N58.18 trillion. This includes N15.52 trillion debt servicing, N15.25 trillion for non-debt recurrent expenditure and N26.08 trillion earmarked for capital spending.
The projected fiscal deficit stands at N23.85 trillion, equivalent to 4.28 per cent of GDP. Oil remains central to the revenue strategy as the government projects crude oil production of 1.84 million barrels per day (bpd) this year, translating to about 672 million barrels for the year.
The budget benchmark price is set at $64.85 per barrel, implying potential gross oil receipts of about $43.84 billion before production costs, joint venture obligations and revenue-sharing arrangements.
More: https://guardian.ng/news/venezuela-crisis-may-create-10b-hole-in-fgs-n58tr-spending-plan/
