FG plans to cut 2019 budget by 5.2 percent to reduce borrowing

19 Oct 2018
Financial Nigeria


The Minister of Budget and National Planning said the federal government is targeting N8.65 trillion as its budget for 2019.

Udoma Udo Udoma, Nigerian Minister of Budget and National Planning

The Minister of Budget and National Planning, Udoma Udo Udoma, said on Thursday that the federal government is targeting N8.65 trillion as its budget for 2019. Compared to the N9.12 trillion approved budget for 2018, the projected fiscal spending for next year is 5.2 percent smaller than the amount appropriated in 2018.

The minister, who disclosed this at a public consultation for the 2019-2021 Medium Term Fiscal Framework (MTEF) and Fiscal Strategy Paper (FSP) in Abuja, said the reduction in spending will reduce the country's fiscal deficit, and hence its borrowing.

The 2016 budget, which was the first fiscal spending plan approved by the Muhammadu Buhari administration, was expanded to N6.06 trillion and had a deficit of N2.21 trillion. The 2017 budget was further expanded to N7.44 trillion, with a deficit of N2.32 trillion. Meanwhile, the deficit in the N9.12 trillion budget for 2018 is N1.95, as the government had a higher revenue projection.

Udo Udoma said the 2019 budget will further reduce the deficit by about N300 billion from N1.95 trillion in 2018 to N1.6 trillion next year.

Meanwhile, as the government ramped-up its deficit spending by borrowing from both the local and international debt markets, Nigeria's public debt stock increased from N12.2 trillion as at June 30, 2015 to N22.4 trillion as at June 30, 2018, according to data provided by the Debt Management Office (DMO).

“2018 revenues up to August 2018, was N2.48 trillion, while the full year 2017 revenue was N2.6 trillion," said the Minister for Budget and National Plannng. "Overall, 2018 revenues current run-rate is 30 per cent higher than last year’s. This is the reason we have cut the size of the budget from N9.12 trillion to N8.65 trillion.” 

The key assumptions for the projected slimmer budget for 2019, according to Udoma, include an oil production target of 2.3 million barrel per day (mbpd), oil price benchmark of $60 per barrel, and an exchange rate of N305 per dollar. With 2.3mbpd produced, an oil revenue of N3.6 trillion is projected, and an independent revenue of N624 billion is projected compared to the N847 billion expected in 2018.

Nigeria's GDP growth rate has also been reviewed downward to 3.01 percent for 2019, from the 3.5 percent projected in the Economic Recovery and Growth Plan (ERGP).


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