Abuja - President Goodluck Jonathan warned Tuesday that Nigeria could be forced to cut further the amount of oil revenue it uses for government spending if the global crude price continued to plummet.
The warning came on the evening of the presentation of the revised 2015 budget that could see politically sensitive spending cuts just weeks before presidential and parliamentary elections.
Finance Minister Ngozi Okonjo-Iweala last month announced a cut in the proposed benchmark rate for next year from $78 to $73 a barrel and earlier this month reduced that to $65.
Abuja sets a so-called benchmark oil price. Revenue from oil exports up to that price go into general government spending. Anything above left over goes into an Excess Crude Account (ECA), a sort of rainy-day fund.
The near halving of the global crude price in the past six months has led to a squeeze on government finances, which is likely to see cuts made when Okonjo-Iweala presents Wednesday a revised budget estimate for next year.
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Jonathan said he expected not to have to cut the government's benchmark oil price further because of estimates that crude could stabilise at between $65 to $70 a barrel next year.
But he warned: "There is no iron-clad guarantee where oil prices are concerned due to numerous underlying global, geo-political factors that are outside our control and unpredictable.
"Should prices fall below the range, the country would have to make further adjustments."
Brent crude slumped to a five-year low under $59 in trading on Tuesday.
Nigeria is Africa's largest oil producer and depends on crude exports for 70 percent of government revenue and some 90 percent of its foreign exchange earnings.
The downward revision of the benchmark has already led to changes in next year's budget forecast and prompted the finance ministry to impose belt-tightening measures.
Nigeria goes to the polls to elect a new president and parliament in February next year and the funding squeeze could force politicians to reign in spending pledges.
Given Nigeria's oil-dependent economy, Okonjo-Iweala has described the fall in global oil prices as a "serious challenge" to the country.
The ECA should have been well-funded from when prices were higher but the government has been repeatedly accused of raiding it to meet budget shortfalls brought on by corruption.
This week the two main oil workers' unions began an indefinite strike over a series of issues, including a long-awaited law to overhaul the inefficient and corrupt sector.
The unions claim that the strike, which saw some initial panic buying at petrol pumps on Monday, would hit production but analysts said output had not been affected.