Nigeria plans to reduce recurrent spending, such as salaries, to about 67 percent of its budget by 2015, and lower domestic borrowing in Africa’s most-populous country, Finance Minister Ngozi Okonjo-Iweala said.
Africa’s second-largest economy plans to borrow 794 billion naira ($4.9 billion) locally next year, 7 percent less than 852 billion this year, Okonjo-Iweala told reporters in the capital, Abuja, today. Nigeria will fund its forecast deficit of 2.8 percent in 2012 through selling debt as well as using earnings from privatization of state companies and sale of oil exploration licenses, she said.
“Just like we want recurrent to be on a downward trend, we want domestic borrowing to be on a downward trend,” she said.
The government is tightening spending next year to enable the central bank to lower its benchmark lending rate, she said. The Abuja-based bank kept the rate unchanged for the first time this year at a record high of 12 percent on Nov. 21 after raising it 6 percentage points this year to curb inflationary pressures. The proposal for the 2012 budget includes a 6 percent increase in spending to 4.8 trillion naira.
Nigeria aims to restructure its spending in the next four years, raising capital spending to reach a third of total expenditure by 2015, Okonjo-Iweala said.
President Goodluck Jonathan said in his budget speech to Parliament yesterday that recurrent spending will drop to 72 percent of total government expenditure in 2012. Jonathan is still holding talks on plans to further cut spending by ending fuel subsidies and will make a decision “at the appropriate time,” the minister said, without giving further details.
The government expects to save 1.2 trillion naira a year by scrapping the subsidies, a move opposed by lawmakers and labor unions because it threatens to boost costs in the nation of more than 160 million people.
Nigeria’s excess crude account, which receives oil revenue above the price used for the budget, had $4.2 billion at the end of November, she said. The proposed budget for 2012 is based on an oil price of $70 per barrel, Jonathan told lawmakers yesterday.