President Muhammadu Buhari on Tuesday, October 02, 2016 sent a draft of the 2017 Budget to the upper house of the parliament for approval.
The 2017 budget draft detailed plans to spend a record of 6.86 trillion naira ($22.57 billion) in an attempt to pull Africa’s biggest economy out of recession.
The plan assumes an oil price of $42.5 per barrel and
production of 2.2 million barrels a day, as well as an exchange rate of 290
Naira to the U.S. dollar.
production of 2.2 million barrels a day, as well as an exchange rate of 290
Naira to the U.S. dollar.
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.
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.
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.”
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.
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.
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.
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.
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.
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.
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.
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.
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.”
“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.
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.
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.
August, is “expected to moderate to 12.92 percent” next year.
