Economist Calls For More Realistic Oil Benchmark For Medium Term Expenditure Framework

The Centre for the Promotion of Private Enterprise (CPPE) has urged the federal government to deepen its shift toward fiscal realism by adopting more conservative assumptions for crude oil price and production in the 2026–2028 Medium Term Expenditure Framework.

The chief executive of CPPE, Dr Muda Yusuf, stated yesterday said the latest MTEF presented by the minister of Budget and National Planning, Senator Abubakar Atiku Bagudu, reflects a more cautious approach than previous years, especially after repeated shortfalls in revenue and widening gaps between budget projections and actual performance.

Pointing out that the new document marks a departure from the revenue optimism that has undermined implementation in recent cycles, he commended the introduction of dual oil production parameters with a technical target of 2.06 mbpd and a budget benchmark of 1.80 mbpd.

The CPPE chief whilst noting that the revised benchmark remains optimistic when placed against Nigeria’s historical production struggles, said a more realistic benchmark of 1.6 mbpd is recommended to shield the budget from shocks associated with theft, vandalism, and operational constraints that have trailed the sector for years.

Asides this, he said proposed an oil price benchmark of $60 per barrel saying while “the 2026 oil price benchmark of $64.85 per barrel, down from $75 in the 2025 budget, even this estimate is still somewhat optimistic, given global forecasts.

The United States Energy Information Administration (EIA) is projecting $55/barrel while Goldman Sachs and the World Bank are looking at a benchmark of $56 and $60/barrel. “These projections are driven by expectations of increased global supply, moderating demand, and rising inventories. Aligning Nigeria’s benchmark closer to $60/barrel would strengthen the MTEF’s resilience.” He said.

He also noted that the exchange rate assumptions reflect macro risks and pre-election pressures saying “the benchmark exchange rate of N1,540/$ acknowledges likely liquidity pressures arising from the 2026 election cycle and broader macroeconomic dynamics.

“This assumption provides a realistic basis for planning around forex-linked capital projects, contract price variations, imported input costs and broader implementation risks. Although a weaker naira increases project costs, it simultaneously boosts naira-denominated revenues.

This benchmark, therefore, provides a credible basis for fiscal planning.”

He also stated that the GDP growth projection of 4.68 per cent, “though optimistic, remains largely aspirational and does not materially distort fiscal planning. More importantly, the 2026 revenue projection of N34.33 trillion, a 16 per cent reduction from the N36.35 trillion projected for 2025, reflects a more grounded assessment of Nigeria’s revenue conditions despite ongoing tax and administrative reforms. This downward adjustment is a welcome sign of improved fiscal prudence.”

On the country’s rising debt, Yusuf said debt sustainability remains a critical concern. According to him, the MTEF projects and allocates N15.91 trillion to debt service in 2026, representing 46 per cent of projected revenue. “This level of debt-service commitment significantly limits fiscal space for infrastructure investment, social sector spending as well as security and stabilisation programmes.

“Nigeria’s rising debt trajectory underscores the urgent need for a renewed focus on debt sustainability, stronger domestic revenue mobilization, greater efficiency, cost-effectiveness, and accountability in public expenditure.”