Nigerian President Muhammadu Buhari on
Tuesday, October 4, 2016 sent a draft budget framework for 2017 to the
national assembly for approval, detailing plans to spend a record 6.866
trillion naira ($22.57 billion) aimed at pulling Africa’s biggest
economy out of recession.
The planned spending is up from this
year’s 6.06 trillion naira budget and seeks to stimulate growth in
Africa’s most populous nation by funding infrastructure development to
increase manufacturing, create jobs and reduce costly imports.
Nigeria, an OPEC member, slipped into
recession for the first time in more than 20 years in the second quarter
largely due to low global oil prices. Crude oil sales account for about
two-thirds of government revenue.
“The thrust of the fiscal year 2017
budget is to restore the economy to a sustainable inclusive growth
path,” said the document, adding that the focus is to “utilise targeted
spending in critical sectors that have quick transformative
capabilities.”
The framework has spending plans for
2017 to 2019 and must be approved by the Senate before the final budget
for next year is submitted.
It could be months before a final budget
is passed into law. The 2016 budget became law in May after being
delayed by several weeks due to wrangling between the government and
Senate.
Problems related to oil prices have been
exacerbated by attacks on energy facilities that have cut crude
production, which was 2.1 million barrels per day (bpd) at the start of
2016, by 700,000 bpd.
Buhari’s plan assumes production of 2.2 million bpd in 2017 at a price of $42.50 per barrel.
It sees production rising to 2.3 million
bpd and 2.4 million bpd in 2018 and 2019 at an average price of $45 per
barrel and $50 per barrel respectively.
Brent crude settled down 2 cents at
$50.87 a barrel on Tuesday after rising earlier to $51.37, its highest
since June 10, on optimism about planned OPEC output cuts.
Nigeria’s growth has been stunted for
decades by a lack of investment in its power, road and rail network. And
the president has repeatedly stated the need to expand the country’s
manufacturing base to end the reliance on crude exports and cut the
country’s $20 billion annual food import bill.
The document said the spending plans
sought to create a “more developed infrastructure base” in order to
“stimulate real sector productivity, job creation and increased private
sector investment.”
The naira has lost more than a third of
its official value since a peg holding it at 197 to the U.S. dollar was
removed in June after 16 months. The currency has hit record lows
against the dollar on the black market in recent weeks.
The proposal sent to parliament on
Tuesday assumes an exchange rate of 290 naira to the U.S. dollar and
projects gross domestic product (GDP) to grow by 3.0 percent in 2017.
GDP contracted by 2.1 percent in the second quarter of this year.
And inflation, which hit an 11-year high
of 17.6 percent in August, is “expected to moderate to 12.92 percent”
next year. ($1 = 304.2500 naira)
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