President Muhammadu Buhari wants to increase spending by 16 percent next year to help boost growth of an economy emerging from its worst slump in a quarter century.
Buhari during his Budget 2018 proposal presentation yesterday urged the National Assembly to approve spending plans of N8.6 trillion in 2018, compared with N7.4 trillion this year. The government targets a deficit of N2 trillion, compared with 2017’s estimated N2.3 trillion shortfall.
Lawmakers are required to approve the budget before spending can start. In the last two year delays of as much as six months in signing the budget into law held back spending on projects and weighed on economic growth. Africa’s biggest oil producer is rebounding after the economy contracted by 1.6 percent in 2016, the first such performance since 1991, as scarcity of dollars weighed on expansion
The International Monetary Fund forecast Nigeria’s economy will expand by 0.8 percent this year as production of oil increases and foreign-currency availability improve for manufacturers to import inputs.
The 2018 budget is based on projected oil output of 2.3 million barrels a day at $45 per barrel and using an exchange rate of N305 per dollar, Buhari said.
“The impact on the economy will depend on the implementation of the capital budget,” Adewale Okunrinboye, an analyst at Ecobank Transnational in Lagos, said by phone.
The government forecast growth of 3.5 percent in 2018, according to Buhari’s presentation. Inflation, seen at 12.5 percent for next year, may allow room for the central bank to ease monetary policy. It left the benchmark interest rate at a record high of 14 percent since July 2016.
The budget, he said, was prepared and dedicated to the country’s economic recovery and growth. He appealed to the militants in the oil rich Niger Delta not to revert to violence or engage in destruction of oil and gas facilities and advised that dialogue was the key in ensuring peace and development.
“We must come together to address our grievances. Threat and violence is not the way out,” he said.
Buhari also appealed to members of the National Assembly to threat with budget estimate with all seriousness so that the country could revert to its January to December fiscal year.
He revealed he had directed that the military and other agencies should be enrolled in the Integrated Payroll of Personnel Information System (IPPIS) for the purpose of paying their salaries centrally to eliminate ghost workers.