Abuja - Dr Ousmane Dore, the Country Director, African Development Bank (AfDB), has predicted that the Nigerian economy will grow by six per cent in 2015 in spite of the oil price shock.
Dore said in Abuja that the economic prospect of the country was still good, even though it was going to be affected by the oil price shock.
"The country’s prospect is going to be affected downward by this major oil price shock and we still expect growth to be in the range of 5.5 to 6 per cent this year notwithstanding the shock.
"How is the economy going to be affected by this? It is clearly depends on how the government is going to react to this shock. The first thing is to see if this shock or decline is going to be transitory or permanent.
"To the extent that they are permanent, you need to do a major adjustment to the budget because as you know, the budget is based on benchmark price for oil.
"As you know today, the price is even below the 65 dollars per barrel that the government has budgeted, it means that the government would require a tough adjustment to counter the impact of the decline on its revenue.
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Dore said that should the government failed to react positively to the oil price shock, the situation might lead to large borrowing since the country’s economy was largely dependent on oil export.
He said there was need for government to view whether the price shock would be transitory or permanent, adding that budget adjustment was necessary should the fall becomes permanent.
Dore said a continuous fall in oil prices below the revised benchmark of 65 dollar per barrel could reduce total federally collected revenue of which oil contributed over 70 per cent.
He said that if the gap could not be filled by increasing non-oil sources of revenue, the situation could also force the government to revise its Medium-Term Expenditure Framework (MTEF).
According to him, this could mean embarking on additional and expectedly painful spending cuts with significant consequences on the future development prospects of the country.