Nigeria’s cabinet has decided on a 6 trillion naira ($30.3 billion) budget for 2016, the planning minister said on Monday, marking a 1.5 trillion naira rise on last year despite low oil prices that have hammered Africa’s biggest economy.
President Muhammadu Buhari, who took office in May, has said his administration wants to diversify the oil-reliant economy by boosting the agriculture and mining sectors while cracking down on corruption to end the leakage of money from public coffers.
Budget and Planning Minister Udoma Udo Udoma said 30 percent of next year’s budget would be allocated for capital expenditure, adding that ministers in the continent’s top crude producer aimed to fund this through a rise in non-oil revenues.
Nigeria, which relies on oil exports for 70 percent of government revenue, faces its worst economic crisis in years brought on by the sharp fall in crude prices.
Udoma said the cabinet was assuming a conservative oil price of $38 a barrel and oil production at 2.2 million barrels per day. Lawmakers passed the 2015 budget at $53 a barrel in April.
“(The cabinet) today approved a medium-term framework for three years…It will be submitted to the National Assembly…We are projecting a 30 percent capital budget for next year,” the minister said after a cabinet meeting in the presidential villa.
Widespread corruption and mismanagement have stunted development in Africa’s biggest economy and left it with paltry savings despite several years of high oil prices.
Udoma said much of the budget would be funded by “trying to get more money from the various government agencies” and policing their collection, with borrowing making up any shortfall. He did not elaborate.
“The level of borrowing that we anticipate and we are projecting will be well within the maximum that we allow, which is 3 percent of the GDP, because want a prudent budget,” he said.
Finance Minister Kemi Adeosun said the government would identify spending excesses and impose guidelines to cut waste.
It was not clear whether the fuel subsidy, a heavy burden on the nation’s purse, would be retained in 2016. “We are looking into that,” said Udoma when asked if it would be retained.
Many analysts have said the current low oil price would be an ideal time to cut it without hitting the population too hard.