'Nigeria's 2016 budget deficit of 2.2 tln naira, to be funded by borrowing'

  • Budget will increase about 20 percent next year from 2015
  • President says stimulus needed to boost country’s growth

Nigeria expects a budget deficit of around 2.2 trillion naira ($11 billion) in 2016 which would be funded by local and foreign borrowing, President Muhammdu Buhari said on Tuesday.

He also told parliament the West African nation expected revenues of around 3.9 trillion naira next year.

The total budget volume would be 6.08 trillion naira, of which 1.8 trillion would be spent on capital expenditures to make Africa’s biggest economy more “competitive”, Buhari said.

GDP growth would be 4.4 percent next year, he said, reiterating that the budget was based on an oil price of $38 a barrel. Oil production would be 2.2 million barrels a day.

“The budget proposal seeks to stimulate the economy, making it more competitive by focusing on infrastructure,” Buhari, a 73-year-old former general who last ruled Nigeria in the mid-1980s, told lawmakers in Abuja, the capital. “We believe that this budget, while helping industry and commerce pick up, will address the issue of unemployment.”

Africa’s largest oil producer, which usually derives two-thirds of government revenue from the commodity, has seen its finances battered by crude prices that have fallen almost 70 percent in the past 18 months to below $40 a barrel.

Growth is set to ease to 3.2 percent this year, the slowest pace since 1999, according to a Bloomberg survey of economists. The government expects it to accelerate to 4.37 percent in 2016, Buhari said.

The deficit will be plugged with 1.84 trillion of borrowing, 900 billion of which will come from international debt markets, Buhari said.

Capital expenditure, as opposed to recurrent spending on public sector salaries and pensions, will more than triple to 1.8 trillion naira in 2016, meaning its proportion of the budget will rise to 30 percent from around 15 percent this year.