Nigeria bases 2014 budget on higher growth, oil output
ABUJA (Reuters) - Nigeria's budget next year will assume economic growth of 6.75 percent and oil output of 2.39 million barrels per day, a fiscal plan said on Thursday, implying a significant improvement from current production levels. Africa's second largest economy grew 6.18 percent and oil output was 2.11 million bpd in the second quarter this year. Total budget spending next year would be 4.5 trillion naira, compared with 5 trillion naira this year, according to a proposal sent by President Goodluck Jonathan to the national assembly. Lawmakers usually inflate spending plans. Nigeria has in the past been overly ambitious about future growth and oil production, economists say, often meaning oil savings are depleted, the deficit widens or borrowing increases. Recurrent expenditure - the cost of running the government - will rise to 74 percent of the budget from 64 percent this year, leaving less cash for infrastructure and development. Recurrent spending fell to 71 percent in 2012, from 74 percent in 2011, so next year's rise reverses those gains. Increased recurrent expenditure often occurs prior to elections and can be a signal for greater squandering of state revenues on political patronage - a major concern for investors. Nigeria has nationwide elections in early 2015. Finance Minister Ngozi Okonjo-Iweala, who was previously a director at the World Bank, pledged to cut recurrent expenditure when she took office in 2011. Finance ministry officials were not immediately available for comment. According to the plan published on Thursday, the budget deficit is expected to be 1.9 percent of GDP in 2014, up from 1.85 percent this year and a previous pledge of 1.4 percent in a fiscal plan laid out last year. Total new borrowing is due to increase to 572 billion naira next year, from 577 billion this year, the paper said. Nigeria's budget has supplementary planned spending of 274 billion naira in 2014, around the same as this year, from a subsidy reinvestment scheme, set up after the partial removal of fuel subsidies last January.
