The ongoing Covid-19 pandemic which emerged in 2020 resulted in a global crisis. Nigeria was not immune to the crisis, hence felt the brunt as well. Nigeria experienced a twin shock, the health crisis (i.e. Covid-19 pandemic) and declining oil prices which negatively impacted the country's fiscal position.

An initial national budget of N10.6trn had been earmarked for 2020 with assumptions of USD57 per barrel, 2.18mbpd in oil production, an exchange rate of N305/USD and growth rate of 2.93% y/y. The emergence of the pandemic which triggered an economic downturn, quickly made these assumptions significantly optimistic. The benchmark price of oil for the 2020 budget was revised down to USD28/b while benchmark oil production was pegged at 1.8mbpd. 

We note that by end-December 2020 oil price stood at USD52 per barrel. Based on the revised 2020 budget framework, N5.4trn was projected to fund the budget pegged at N10.8trn (slightly higher than previous headline expenditure), resulting in an assumed deficit of N4.6trn.

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