November 6, 2020

Nigeria Economic Update (Issue 41)

President Muhammadu Buhari presented the Federal Government’s Proposal for the 2021 fiscal year before a joint sitting of the National Assembly. The proposed Revenue and Expenditure budgets are ₦7.89 trillion and ₦13.08 trillion respectively, representing a ₦5.20 trillion fiscal deficit.1 With an estimated Gross Domestic Product (GDP) of ₦1.43 trillion2, the fiscal deficit is 3.64 percent of estimated GDP, above the 3 percent threshold set by the Fiscal Responsibility Act of 2007. Key assumptions of the proposed budget include: $40 per barrel oil benchmark, crude oil production of 1.86 million barrel per day, an exchange rate of ₦379 per US$, GDP growth rate of 3 percent and inflation rate of 11.95 percent. The high fiscal deficit increases the likelihood of a default in the near term as the government is unlikely to considerably raise tax or cut back on government programmes. The overtly expansionary macroeconomic policies and explicitly unsustainable public debt dynamics calls for reforms capable of increasing the share of domestic savings to finance domestic capital stock rather than external debt.

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Nigeria Economic Update (Issue 40)

Global crude prices settled lower in the review week (September 29 to October 6, 2017). Precisely, a barrel of Brent crude sold for about $56, showing a 6.3 percent decrease. Nigerias Bonny light exchanged at $56.76 per barrel as at October 6, 2017. The draw down in price may be attributable to indications of higher output, as revealed by the addition of more production rigs by the U.S, rise in Iraqs crude exports and survey showing OPECs overall boosted supply.