Nigeria tags N8 trillion spending for 2018 at $45/barrel oil

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  • Exchange rate is projected at N305/$, inflation rate at 12.42 percent

Nigerian Government has proposed a record N7.939 trillion spending for 2018, which ramps up expenditure despite recording a N2.5 trillion deficit in the first half 2017, which is already more than the N2.2 trillion deficit projected for the whole year.

With the proposed enlarged spending amid lower revenues, fiscal deficit has been forecasted to rise substantially to N2.777 trillion in 2018 from the N2.356 trillion in the 2017 budget, which government is yet to commence full implementation.

The cash-strapped Africa’s largest economy hopes that price of oil – the largest government revenue earner – would continue to rally and has therefore proposed $45/barrel oil benchmark for the 2018, as against N44.5/b for 2017.

These are some of the key assumptions proposed for 2018 budget as contained in the 2018-2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy, which Udoma Udo Udoma, minister of budget and national planning, presented to civil society organisations, media, organised private sector and general public on stakeholders for input on Thursday in Abuja.

The Federal Government also projects oil production at 2.30 million barrels per day for 2018, even though the Organisation for Oil Producing and Exporting Countries (OPEC) could cap output at 1.8mpb.

Exchange rate is projected at N305/$, inflation rate at 12.42 percent, GDP growth rate at 4.8 percent, Nominal GDP at N133.97 trillion, and Nominal Consumption at N87.95 trillion for 2018.

The government also projects Non-oil Gross Domestic Product (GDP) N104.652 trillion and oil GDP at N29.323 trillion But total gross domestic product is forecasted at N113.4 trillion and debt to GDP ratio of 24.5 percent.

“We are expecting slight growth in the global economic outlook from 3.5 percent in 2017 to 3.6 percent in 2018, and an increase in sub-Saharan Africa from 2.6 percent to 3.4 percent in 2018. So, we are expecting increase in growth in Africa,” Udoma said.

The consultations with key stakeholders began on Tuesday evening with leadership of National Assembly, and will continue on Friday in Lagos.

Udoma said the document would be presented to Federal Executive Council in a fortnight and submitted to the National Assembly in October.
According to Udoma, the projection consists of capital expenditure of N2.408 trillion, though exclusive of transfers. Overall, gross federation account inflows of N10.387 are being projected for 2018, which is slightly less than the N10.403 in 2017.

The minister said the key thrusts of the 2018-2020 MTEF/FSP were consistent with the goals of Economic Recovery and Growth Plan (ERGP), aimed at repositioning the economy on the path of diversified, sustainable and inclusive growth.

He explained that oil sector slowed by-11.64 percent, non-oil sector grew by 0.72 percent first quarter of 2017.
“Government measures to boost the economy are yielding results and efforts at minimising disruptions in the Niger Delta has helped oil production, currently running at 2.2 million barrels per day (inclusive of 450,000 barrels per day of concentrates),” he said.

According to Udoma, the execution priorities of the budget, which aligns with that of the nation’s Economic Recovery and Growth Plan (ERGP), includes to stabilise the macro economic environment, achieve agriculture and food security, improve transportation infrastructure, drive industrialisation with focus on SMEs, and ensure energy sufficiency in power and petroleum products.

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