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Nigeria cuts after oil price fall

By BBC

Nigeria has announced major budget cuts following recent falls in the price of oil, after a special cabinet meeting.

"There have been a number of very serious measures taken to reduce expenditure," said Finance Minister Shamsuddeen Usman.

However, he refused to give any details of where the cuts would be made.

Nigeria is one of the world's biggest oil exporters, but a violent campaign in the main oil region has cut production by 20%.

The government had been expected to present its budget for 2009 to the national assembly next week.

The oil price has fallen by more 50% in just three months and Nigeria relies almost exclusively on oil for its revenue.

Unrealistic

The budget plans for next year had been drawn up assuming a minimum oil price of $62 a barrel and production levels of more than 2.3 million barrels a day.

But the BBC's Alex Last in Lagos says that now seems unrealistic.

Oil is already down to $70 a barrel - from $140 in August - while militant attacks and a lack of government investment in the oil industry mean production levels will struggle to reach that target.

Local media have speculated that the cuts could hit government spending on official cars, civil service training and the rehabilitation of roads, reports the Reuters news agency.

Our correspondent says oil money is Nigeria's lifeblood, and although most Nigerians see very little of the country's huge oil wealth, it does trickle down through the economy from the ruling elite.

He says Nigeria's once fast-growing economy could well see a slight slow down.

He also says that in the past, a falling oil price has meant more political tension as members of Nigeria's elite compete for access to the decreasing pot of cash.

Source: BBC