Wednesday, March 23, 2016 6:13 pm
Nigeria’s National Assembly at a joint sitting, today approved record spending for 2016 in a budget on Thursday that gave few clues about how the country can find the money with energy prices still struggling to recover.
In the amended budget passed by a joint session of the lower and upper houses of parliament, the deficit has risen to 3 trillion naira ($15 billion) from 2.2 trillion.
The overall budget is 6.06 trillion naira, down from the 6.08 trillion naira in the spending plan outlined in December.
The budget, which was read for the 3rd time in both chambers at plenary session, was N17 billion less than the earlier budget of N6.078 trillion presented by President Muhammadu Buhari.
The document, which had a smooth sail, was predicated on oil benchmark of 38 dollars per barrel, crude oil projection of 2.2 million barrels of crude oil per day, and an exchange rate of N197 to one dollar.
The 2016 appropriation bill would be transmitted to President Muhammadu Buhari for his assent.
Briefing newsmen later, Chairmen of the Senate and House Joint Committees on Appropriations, Danjuma Goje and Abdulmumin Jibrin, advised the executive to present budget early to the National Assembly for consideration.
They recommended a shore up in capital expenditure by reducing recurrent expenditure in the 2017 fiscal year.
They disclosed that the N500 billion special intervention fund proposed by the federal government was not touched because of the need to touch lives positively.
The breakdown of the budget shows that N2.646 trillion is for recurrent expenditure, N1.588 trillion for capital expenditure, N1.475 trillion for debt services, N351.370 billion for statutory transfer, while nominal deficit is N2.205 trillion, representing 2.14 per cent deficit/GDP.
President Muhammadu Buhari, elected a year ago to fix an oil-producing economy mired in corruption and mismanagement, presented a record $30 billion budget in December to invest in roads, power supply and diversify away from oil.
It aims to recharge the economy by trebling capital spending compared with 2015’s plan. A deepening crisis slowed gross domestic product growth to 2.8 percent in 2015, its weakest in decades.
“Although Nigeria has a low debt-to-GDP ratio… the authorities will be under pressure to demonstrate rapid progress in raising revenue,” said Razia Khan, chief economist, Africa at Standard Chartered bank.
“Given the weak economic outlook, this will not be easy,” she said, adding that debt service was making up 24 percent of the budget, compared with an estimated 22.4 percent in December.
The central bank raised its benchmark interest rate to 12 percent from 11 percent on Tuesday in a surprise move, just four months after a rate cut, seeking to curb inflation which hit a three-year high of 11.4 percent in February.
Oil revenues, which make up about 70 percent of Nigeria’s income, have slumped, whacking the currency, halting development projects and leaving budget funding uncertain.
In January, Finance Minister Kemi Adeosun Nigeria said Nigeria planned to borrow up to $5 billion from multiple sources, including the Eurobond market, but officials have not provided an update since then.
Nigeria has in recent months held exploratory talks with the World Bank and tried to secure funding from the African Development Bank and China’s export bank, but no deal has publicly emerged.
On Wednesday, Adeosun said the government planned capital expenditures worth $1.7 billion alone in the next quarter under plans to revive growth.