Nigeria’s federal government plans to increase spending by 7% to 2,47-trillion naira ($20-billion) in 2008 from 2,3-trillion naira the previous year, President Umaru Yar’Adua said on Thursday.
Yar’Adua, addressing a joint session of the Parliament, said education spending will rise by 12% over the previous year, health spending by 13% and expenditure on energy by 16%.
The amount allocated to spending on security nationwide and on security and development in the volatile oil-rich Niger Delta will go up by 7%, he said.
The overall spending increase is contained at 7% because of savings on the capital budget, notably on expenditure on roads, which was heavily overbudgeted for in 2007 (election year), an official involved in drawing up the 2008 and 2007 budgets said.
”The 2008 budget … gives priority to, and makes ample provision for, improving physical infrastructure, particularly power and transportation, human capital development, the Niger Delta and social safety nets,” Yar’Adua said.
The budget is based on projected GDP growth of 11%, inflation of 8,5% and an exchange rate of 117 naira to the dollar, against 127 the previous year. The Nigerian currency has been strengthening against a weak dollar over the past few weeks.
Total revenue available to fund the budget will be 1,986-trillion naira, leaving a budget deficit of 484-billion naira, the official said.
This gap will be financed by domestic borrowing, from the proceeds of privatisation and from oil-block signature bonuses — the money paid upfront by an investor who is allocated an oil block in Nigeria.
Crude oil production is projected at 2,45-million barrels per day and the oil price is assumed to be $53,83 per barrel, compared with 2,5-million barrels per day and a price of $40 dollars for 2007. Nigeria is currently selling its crude oil at more than $95 a barrel.
Oil revenue represents 80% of total estimated revenue. ”We will continue to diversify our revenue base by further development of the non-oil sectors of our economy,” the president said. — Sapa-AFP