The Nigerian government proposed increasing spending next year without overstepping borrowing targets even as it budgets for a “conservative” benchmark oil price.
Under a three-year economic plan approved by the cabinet, government expenditure will rise to 6 trillion naira ($30 billion), Budget and Planning Minister Udoma Udo Udoma told reporters on Monday in the capital, Abuja. In April, the Senate approved spending of 4.5 trillion naira for 2015 and lawmakers last week authorized an increase of 466 billion naira.
While the budget next year will be “expansionist,” the assumed oil price will be just $38 a barrel because of “uncertainties” and the output target is set at 2.2 million barrels a day, said Udoma. The benchmark price in this year’s budget approved in April was $53 a barrel.
The West African nation, Africa’s biggest economy, is contending with a slump in the price of oil, which is the source of 70 percent of government revenue.
The government will try to boost its income by increasing revenue from industries other than oil, cutting costs and improving the collection of taxes and fees, said Udoma.
The “level of borrowing that we anticipate and we’re projecting will be well within the maximum that we allow, which is 3 percent of gross domestic product because we want a prudent budget,” Udoma said. He didn’t provide further details about how the budget will be financed.
Nigerian President Muhammadu Buhari and his Angolan counterpart, Jose Eduardo dos Santos, earlier this week called for a new consensus among oil producing nations on the current level of the oil price.