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By Paul Carsten and Ulf Laessing
ABUJA Dec 14 Nigeria expects its 2017 deficit
to rise to 2.36 trillion naira ($7.75 billion), President
Muhammadu Buhari said on Wednesday, as the government tries to
drag Africa's biggest economy out of recession with a budget
that foresees record spending.
Buhari is facing rising disenchantment with his handling of
the economy as Nigeria struggles with 18 percent inflation and
its first recession in 25 years, brought on by low global prices
for the oil it produces.
Capital expenditure will rise by nearly a quarter next year
to 2.24 trillion naira as the state invests in roads, railways
and power plants to diversify the economy, Buhari told
"This budget...represents a major step in delivering on our
desired goals through a strong partnership across the arms of
government and between the public and private sectors to create
inclusive growth," he said. "Fiscal, monetary and trade policies
will be fully aligned."
But John Ashbourne, economist at Capital Economics in
London, said the budget's planned oil production of 2.2 million
barrels a day looked "very, very optimistic" as militant attacks
had cut output to 1.68 million bpd.
He said the assumed currency rate of 305 naira to the
dollar, some 40 percent stronger than the black market rate,
meant Nigeria did not plan a new devaluation, as demanded by
investors who have been reluctant to commit money at the current
rate. "That's pretty worrying for the non-oil economy," he said.
Spending is set to rise 20.4 percent to 7.3 trillion naira,
and revenues are projected to increase by 28 percent to 4.94
trillion naira, the president said.
The deficit would be funded by borrowing 1.254 trillion
naira domestically and 1.067 trillion naira abroad, he said,
putting the debt to GDP ratio at 2.18 percent compared with
2.16 percent in 2016.
Buhari did not say when Nigeria would emerge from recession
and whether the deficit for 2016 would be 2.2 trillion naira as
forecast. The government has struggled to fund the 2016 budget
as a Eurobond sale and World Bank loan have been delayed.
The budget must be agreed by parliament before being sent
back to Buhari to be passed into law. The 2016 budget became law
in May after being delayed by several months by wrangling
between the government and the upper house of parliament.
Senate President Bukola Saraki said lawmakers would
cooperate with the government. "We assure you Mr. President and
all Nigerians that not even a single minute would be wasted on
our side in the course of getting this budget approved," he
(Additional reporting by Oludare Mayowa, Alexis Akwagyiram and
Chijioke Ohuocha; Writing by Alexis Akwagyiram and Ulf Laessing;
Editing by Mark Trevelyan; Editing by Mark Trevelyan)