Nigeria Economy Flash Note - Another record budget, but business as usual for FG
On the 7th of November 2017, President Buhari presented the 2018 Budget of ₦8.6 trillion to the National assembly. A 16% increase on last year’s, 2018 spending pegs recurrent (Non-debt) expenditure at ₦3.5 trillion, capital expenditure at ₦2.6 trillion, and debt servicing at ₦2.0 trillion. With 2018 Budget revenue estimated at ₦6.6 trillion – to be funded by oil revenues of ₦2.4 trillion and non-oil revenues of ₦4.2 trillion, the current administration is eyeing a deficit of ₦2.0 trillion, lower than in previous years (2017: ₦2.4 trillion; 2016: ₦2.2 trillion).
The 2018 Budget is based on an oil price assumption of $45/bbl, daily production of 2.3 million barrels, and an exchange rate of NGN305/USD, all in line with 2018-2020 Medium Term Expenditure Framework parameters.
The 2018 Budget is in line with the countercyclical fiscal stance of the present administration. Unsurprisingly, the same issues of revenue accrual, speed of passage, and skill in execution would determine the success of this year’s fiscal efforts. We expect the quality of budget implementation to be a key driver of macroeconomic performance in 2018, and emphasize the importance of capital expenditure and human capital efforts at increasing Nigeria’s long-term productive capacity.
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