Nigeria’s President Muhammadu Buhari signed the delayed 2016 budget into law yesterday, ending weeks of wrangling with lawmakers and tripling capital expenditure.
The 6.06tn naira ($30.6bn) budget is an attempt by Africa’s top oil exporter to stimulate an economy hammered by the fall in crude oil prices. Oil sales make up about 70% of national income.
The budget assumes oil production of 2.2mn barrels per day at $38 a barrel, Budget Minister Udoma Udo Udoma told reporters shortly after the signing ceremony.
Growth last year fell to its slowest rate since 1999 at 2.8% and inflation rose to a near four-year high of 12.8% in March while capital imports declined by 74% year-on-year in the first quarter of 2016.
“It is a great pleasure to sign the budget. It is a serious article of faith for the Nigerian people,” the president said at a ceremony attended by ministers, the Senate president and officials. “The signing of the budget today will trigger concerted efforts to reflate the Nigerian economy, a key element of which is an immediate injection of 350bn naira into the economy by way of capital projects.”
Buhari said the current period was “probably the toughest economic times in the history of our nation”.
“In designing the 2016 budget, we made a deliberate choice to pursue an expansionary fiscal policy despite the huge decline in government revenues from crude oil exports,” he said.
The president said 350bn naira would be spent on capital projects, and he compared the 200bn naira allocated to road construction with the 18bn naira earmarked for that purpose in the 2015 budget.
Buhari withdrew his original budget bill in January because of an unrealistic oil price assumption.
He also found errors in the budget that civil society groups indicated possible graft, such as multiple purchases of the same vehicles, computers and other equipment.
The former military head of state, who has embarked on a widespread anti-corruption campaign since taking office last May, has claimed some lawmakers removed and replaced proposals.
He has promised to punish those involved.
Parliament approved an amended proposal in March but only submitted highlights, prompting Buhari to say he would only sign the bill after it was resubmitted.
The lack of a budget, almost a year after Buhari took office, meant ministries were unable to allocate funds to projects in various sectors.
“The passage of the budget has been a long journey, and it has been as much about process as content,” Nigeria-focused PM Consulting’s Antony Goldman, said.
The government plans to generate 3.38tn naira this year from non-oil sources, up 87% from 1.81tn naira in 2015.
But, with the heavy reliance on oil sales, it is unclear how this will be achieved.
Finance Minister Kemi Adeosun has said Nigeria is expected to post budget deficits for the next two to three years.
In 2016, the deficit is seen at 2.2tn naira compared with a previously estimated 3tn.
She has said Nigeria plans to borrow a total of 1.8tn naira from abroad and at home.