Nigeria’s President Muhammadu Buhari has proposed an unprecedented $24 billion budget for the 2017 fiscal year. According to Reuters, the President’s budget proposal, which was delivered Wednesday to a joint session of Nigeria’s National Assembly, seeks to pull Africa’s largest economy out of its first recession in nearly 25 years by pushing for record spending.
The budget proposal titled, “Budget of Recovery and Growth,” expects to see government spending rise by 20.4 percent. Capital expenditure alone would total $7 billion and would be allocated to the development of power supply, roads, railways, and modern health facilities.
Revenue is expected to rise by 28.1 percent to $16.2 billion as crude oil prices are expected to rise significantly in 2017 following the crash in oil prices in 2016 due to the global slump in commodity figures. The budget also promises to diversify the Nigerian economy by focusing more attention towards non-oil sectors.
The budget deficit is expected to rise by $7.75 billion, however the government hopes to cover this shortfall through borrowing. The 2017 budget proposes to shop for loans of up to $4.142 billion from the domestic market and source for an additional $3.5 billion from foreign lenders. Nigeria’s current debt to GDP ratio is at 2.16 percent.
The proposed budget estimate is predicated on an exchange rate benchmark of N305 against the U.S. dollar, with oil production capacity put at 2.2 million barrels per day, which analysts believe to be slightly over optimistic considering the country’s well documented history of attacks against oil installations by armed militants.
In his budget address, President Buhari told the Nigerian parliament that, “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. Fiscal, monetary, and trade policies will be fully aligned.”
The budget proposal will now be debated on by Nigerian lawmakers, most likely amended, and then sent back to President Buhari for passage into law.