Nigeria will propose a supplementary budget later this year to boost capital spending and fund a 67% increase in the minimum wage as government revenues improve, the budget minister said.
Additional spending plans will be funded from improved oil revenue as the price of crude rose to above $70 a barrel compared with a level of $60 that the 2019 budget was based on, Budget Minister Udo Udoma said last week in an interview in the capital, Abuja.
Nigeria, which vies with South Africa as the continent’s largest economy, is recovering from a downturn triggered by the 2014 crash in the price of oil, its key export and main foreign currency earner. After cutting the 2019 spending proposal due to revenue that was below target, the government wants to ramp expenditure on infrastructure. Gross domestic product is on track to expand 3% this year, compared with 1.9% in 2018, Udoma said.
“There are a number of projects which we had to cut down because of funding,” he said. “The works, power and housing budget, in my view, we couldn’t fund it to the level to make the kind of impact we need.”
Nigeria has struggled to boost revenue, partly due to the government’s inability to grow its tax base and a failure to deliver on a plan to reduce its stake in oil joint ventures. The nation has earmarked 2.24tn naira ($6.23bn) for capital projects, that include roads and rail, in 2019. Last year, it used only 46% of its capital budget after spending was cut. Lawmakers will on April 16 vote to approve this year’s budget.
President Muhammadu Buhari has signed off on a plan to boost earnings by an extra 720bn naira this year by reducing the country’s holdings in oil joint ventures with international producers including Royal Dutch Shell Plc, Exxon Mobil Corp, and Chevron Corp Restructuring the assets will improve their efficiency and position them for better revenue performance, Udoma said.
Government expenditure “will reduce because if we reduce our joint-venture holding, we also reduce how much we contribute,” he said. “So our cost will go down and our income will go up.” Other measures to boost revenue include expanding the tax base, improving efficiency of government spending and possible increase in value added tax from 5%, Udoma said.
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
IMF chief risks weakened authority after the China-linked investigation
China adds $14bn cash as Evergrande pain roils markets
Iran petrochemical, fuel sales boom as sanctions hit crude
Qatar-Malaysia trade up 33.5% to reach $345mn in January-July 2021
Foreign funds’ buying interests lift QSE, index settles 0.73% higher
‘UAE central bank working to replace interbank rates’
Evergrande market fallout grows as local unit halts bond trading
Europe energy crunch forcing factories in UK to shut down
Outlook for stronger 2022 oil demand offering support to bullish traders, says Rystad Energy