UPDATE 2-Nigeria to scale down budget in face of oil price crash

* Nigeria's finance minister hold talks with president
* Say budget, which assumes $57 oil price, will be cut
* Petroleum minister says oil output will be raised
* Nigeria is Africa's top oil producer
* Crude sales make up 90% of its FX earnings

(Adds petroleum minister, analyst)
By Felix Onuah
ABUJA, March 9 (Reuters) - Nigeria, Africa's top oil
producer, will cut the size of its record 10.6 trillion naira
($34.6 billion) budget for 2020 because of a sharp decline in
the price of crude, the finance minister said on Monday.
Global oil demand is set to contract this year for the first
time in more than a decade as the coronavirus outbreak causes
economic activity to stall, the International Energy Agency said
on Monday. The downward revision came as oil prices dropped as
much as a third after Saudi Arabia launched a bid for market
share following the collapse of an output pact with Russia.
Crude oil sales make up around 90% of foreign exchange
earnings in Nigeria. The 2020 budget, passed in December, was
calculated assuming crude production of 2.18 million barrels a
day at a price of $57 per barrel. Benchmark Brent crude futures LCOc1 were down about 20%
at slightly above $36 a barrel at 1722 GMT. O/R
"There will be reduced revenue on the budget and it will
mean cutting the size of the budget," finance minister Zainab
Ahmed told reporters at the presidential offices in the capital,
Abuja, after a meeting with President Muhammadu Buhari.
She added that she would be part of a committee, also
including the minister of state for petroleum, the head of state
oil company NNPC and the central bank governor, that would
determine the size of the budget cut in the coming days.
The minister of state for petroleum, Timipre Sylva, said
Nigeria would increase its oil output, which stands at around 2
million barrels per day, but did not specify by how much.
Nigeria is still struggling to shake off a 2016 recession,
which was caused by the oil price collapse of late 2014, with
economic growth currently at around 2%.
The West African country, which has deep trade ties with
China, has already felt the impact of the coronavirus due to
disrupted supply chains. Mathias Hindar, a sub-Saharan Africa analyst at consultancy
Falanx Assynt, said persistently low oil prices would put
pressure on the country's "rapidly diminishing" foreign currency
reserves and restrict funds for capital projects.
"We could see the government's ability to protect the naira
diminish, which could subsequently cause significant rises to
inflation rates," he said.
($1 = 306.0000 naira)