By Joel Olatunde Agoi and Ola Awoniyi, AFP
ABUJA, Nigeria–Nigerian President Muhammadu Buhari unveiled Tuesday a budget that triples investment spending in a bid to stimulate growth and lower the dependence of Africa’s largest economy on oil.
Despite the plunging price of oil, Nigeria’s main revenue source, Buhari vowed to increase spending by about 20 percent from this year to 6.08 trillion naira (around US$30 billion). Investment will be a major beneficiary, more than tripling to account for 30 percent of total spending. “We believe that this budget, while helping industry, commerce and investment to pick up, will as a matter of urgency, addresses the immediate problems of youth unemployment and the terrible living conditions of the extremely poor and vulnerable Nigerians,” Buhari told the joint session of the National Assembly in Abuja.
He said that critical infrastructure like power and housing would get 433.4 billion naira, while transport was allocated 202 billion.
Investments in security and defense are also to be stepped up as the country fights Boko Haram jihadists in the north of the country. “These investments in infrastructure and security are meant to support our reforms in the agriculture, solid minerals and other core job creating sectors of our economy,” Buhari said.
The plunge in global oil prices by more than 60 percent since last year has pummeled Nigeria, the continent’s largest oil exporter.
Economic growth will slow to 4 percent this year according to an IMF forecast, down from 6.3 percent last year. Buhari said the budget would help stimulate the economy, delivering 4.37 percent growth in 2016. But government spending will be increasingly made with borrowed money. “They are borrowing much more than in the past and are going to carry a bigger debt burden,” said Ayo Teriba, chief executive officer of Economic Associates, an advisory firm based in Lagos. Revenue is only expected to hit 3.86 trillion naira, with the deficit forecast to rise to 2.2 trillion naira or just less than a third of the total budget. “I would have sought alternatives to fund the budget, such as opening up to foreign investors,” said Teriba.
The budget is based on a price of US$38 per barrel, just above the current market price, and plans for just a quarter of revenues or 820 billion naira to come from oil.