Nigeria Plans Spending Cuts, 3% Deficit, Finance Chief Okonjo-Iweala Says
Nigeria’s government will cut recurrent spending, such as wages, and keep the budget deficit at 3 percent of output while boosting infrastructure investment to create jobs, Finance Minister Ngozi Okonjo-Iweala said.
“We need to maintain macroeconomic stability,” she told reporters today in Abuja, the capital. “We need to manage our fiscal situation in a more prudent manner. Monetary and fiscal policies must work hand-in-hand.”
Nigeria, Africa’s biggest oil producer and most populous nation, increased spending and raised wages this year as it held elections. Recurrent spending accounts for 74 percent of the country’s 4.5 trillion-naira ($29 billion) budget. Okonjo- Iweala, who doubles as coordinating minister for the economy, said she plans to trim spending to “a more reasonable figure” of 70 percent within four years.
The government of President Goodluck Jonathan plans to invest more money in infrastructure projects including power, road and rail. The government will focus on investment-climate changes and complete overhauls in other industries including the removal of a subsidy on refined fuel, Okonjo-Iweala said.
The minister said she favors the central bank’s policy of pegging the naira to the dollar to provide stability for businesses, and promised to work with Governor Lamido Sanusi to have an exchange rate that “reflects the economy.”
In a bid to control inflation, the Central Bank of Nigeria targets naira stabilization by keeping the rate within 3 percent above or below 150 per dollar at its twice-weekly currency auctions.
Nigeria is Africa’s third-largest economy after South Africa and Egypt. The federal government’s domestic debt rose to 5.21 trillion naira at the end of June, from 4.87 trillion naira as of March, according to statements on the Debt Management Office’s website. Nigeria’s economy probably expanded 7.9 percent in the second quarter and will grow 8 percent this year, according to the National Bureau of Statistics.
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