Nigeria Projects Smaller Budget Shortfall Even as Spending Rises

LAGOS (Capital Markets in Africa) – Nigeria said its budget deficit will narrow this year even as the government ramps up spending to spur a stuttering economy.

The fiscal shortfall will close to 1.74 percent of gross domestic product from 2.18 percent in 2017, according to a presentation delivered Thursday by Budget Minister Udo Udoma in Abuja, the capital, a copy of which was emailed to reporters by his ministry.

Of the 2 trillion naira ($5.5 billion) gap, 1.6 trillion naira will be covered by new borrowing, more or less evenly split between foreign and domestic debt markets, according to the presentation.

The 9.1 trillion naira budget, the OPEC member’s largest yet, is based on oil production of 2.3 million barrels a day, a price of $51 per barrel and exchange rate of 305 naira per dollar.

President Muhammadu Buhari signed the spending plan into law on Wednesday, seven months after he presented it to legislators for their approval.

Nigeria’s economy, which has struggled since the 2014 crash in crude prices, will grow 3.5 percent this year, according to Udoma’s projections. That’s more than the International Monetary Fund’s forecast of 2.1 percent. While oil revenue will rise 41 percent to almost 3 trillion naira, non-oil revenue will drop 9 percent to 1.2 trillion naira, Udoma said.