Nigeria will borrow as much as N900 billion abroad to fund its budget deficit which is expected to double to N2.2 trillion ($11 billion) in 2016. It also plans to borrow N984 billion locally. This is to enable the government to revive Nigeria’s weakening economy by tripling capital expenditure.
“The 2016 budget, as outlined, is designed to ensure that we revive our economy, deliver inclusive growth to Nigerians and create a significant number of jobs,” said President Muhammadu Buhari said on Tuesday when he appeared before the parliament to present the budget.
The total budget volume would be N6.08 trillion. Of this total, N1.8 trillion would be spent on capital expenditure to make the Nigerian economy more “competitive”, Buhari said.
Nigeria’s economy has been hard hit by the slump in global oil prices as the commodity accounts for over 80 percent of government revenue and more than 90 percent of foreign exchange earnings. This has weakened the naira and led to the government struggling to fund its budget and companies finding it hard to repay debts.
Knowing fully well that the country’s over-dependence on oil is largely responsible for the current economic troubles, the Nigerian government is looking at other sources of revenue in 2016. Africa’s largest economy expects revenues of around N3.9 trillion next year, only N820 billion of which would come from key oil revenues, according to President Buhari. He added that tax collection will be improved and non-oil industries such as agriculture and mining promoted.
Nigeria’s 2016 budget is an increase of about 20 percent from this year. The N2.2 trillion deficit is 2.16 percent of gross domestic product, increasing from about 0.79 this year.