Nigeria, sub-Saharan Africa's second biggest economy, is expected to present a revised budget for 2009 before parliament in few days, reflecting a cut of more than 30 percent in budgeted oil revenue.
Briefing the senate on the impact of the global financial crisis on Nigeria, Finance Minister Shamsuddeen Usman, said the country is likely to suffer from falling oil prices due to a global recession.
"On the fiscal side, the sharp slowdown in the advanced economies is actually leading to a reduction in the demand for exports generally," Usman said. "And the impact this could have on our own economy is that it could have a reduction in the demand for our export commodities, especially oil."
Nigeria, the world's eight-biggest oil exporter, is struggling to balance its budget for 2009 because it relies on energy sales for about 90 percent of its revenue.
Analysts warn a sharp reduction in government spending could affect economic growth, currently running at more than eight percent annually in the non-oil sector.
The finance minister, accompanied by the central bank governor and planning minister, assured the senators that there was no cause for alarm as measures were in place to stem the impact of the global financial crisis.
The assurance was meant to ease concerns among panic-stricken Nigerians over the projected sharp decline in oil revenue for 2009.
Economists say the government has been under pressure from falling oil prices and the violence in the oil rich Niger Delta where oil industry operations have been under constant threats from militants claiming a fair share of oil wealth to local communities.
According to Nigerian newspapers, some ministries may not receive budget allocation in 2009, while spending on items like the purchase of new cars or overseas training for civil servants may be canceled.