Bloomberg News by by
Nigeria’s lawmakers will send the 2014 spending bill to President Goodluck Jonathan before the Easter holiday, ending wrangling that has delayed the budget by four months, Finance Minister Ngozi Okonjo-Iweala said.
The Nigerian Senate passed a budget of 4.7 trillion naira ($28.9 billion) budget in proceedings in Abuja yesterday. The House of Representatives has to pass a spending bill before it goes to the president to be signed into law. Investors have been watching the budget of Africa’s biggest oil producer for signs that spending will surge in a pre-election year as it did before the 2011 presidential vote, when it climbed 17 percent.
“We have been on a path of fiscal consolidation, and we’ve continued on that path, even this year,” Okonjo-Iweala said. “That was always a risk, but I think we’re almost over that now that they’ve passed the budget.”
The Finance Ministry has lowered the benchmark oil price in this year’s budget to $77.80 a barrel, from $79 a barrel in 2013, Okonjo-Iweala said in an interview at Bloomberg’s headquarters in New York. The holidays start April 18.
Nigeria’s foreign reserves have fallen this year as the central bank intervened in the market to prop up the naira after it reached a record low of 165.65 on Feb. 25. Jonathan suspended central bank governor Lamido Sanusi in February after he called for an investigation into the state-owned oil company for allegedly failing to repatriate $20 billion of revenue to the government. The state oil company, Nigerian National Petroleum Corp., has repeatedly denied the allegations.
The naira “is stabilizing” and foreign reserves are growing again because the country’s Excess Crude Account, which holds the savings the nation makes when the oil price is above the benchmark price estimated in the budget, is being built up again, Okonjo-Iweala said.
The naira rose 1 percent against the dollar to 161.25 on the interbank market as of 12:22 p.m. in the commercial capital, Lagos, narrowing its drop since the start of the year to 0.5 percent.
Nigeria’s economy surpassed South Africa’s as the largest on the continent after the West African nation overhauled its gross domestic product data for the first time in two decades.
On paper, the size of the economy expanded by more than three-quarters to an estimated 80 trillion naira for 2013, the National Bureau of Statistics said April 6. That compares with the World Bank’s 2012 GDP figures of $262.6 billion for Nigeria and $384.3 billion for South Africa.
A poverty survey by the NBS shows that 61 percent of Nigerians were living on less than a dollar a day in 2010, up from 52 percent in 2004. While the revised economic data saw Nigeria’s 2012 debt-to-GDP ratio decline to 11 percent from the 19 percent projected with the old figures, the country won’t change its debt policy and borrow more, Okonjo-Iweala said.
“Our per capita income with new figures is $2,688, so we can’t rush out and say, ‘now we are a rich country,’” she said. “We have to be very prudent and conservative.”