Tuesday, September 20, 2011

Nigeria to base 2012 budget on $75 per barrel

17 September 2011

Nigeria will base its 2012 budget on a benchmark price of 75 dollars for a barrel of oil, the finance minister said.

"We have decided to look at benchmark of oil of 75 dollars per barrel and we need to look at this constantly because as you know there are volatilities in the external markets that may impact on this," Finance Minister Ngozi Okonjo-Iweala said late Friday.

"We are also working with NNPC (Nigerian National Petroleum Corporation) for the year 2012 at 2.48 million barrels per day production and going up gradually to 2.6 million barrels per day production in 2015 as assumption underlying the budget."

Nigeria, which vies with Angola for the title of Africa's largest oil producer, derives more than 90 percent of its foreign exchange earnings from oil.

This Day newspaper quoted the minister as saying that the government would use tax laws to recover 170 billion naira (around one billion dollars) that it is owed in tax revenue.

Priority sectors in the 2012 budget are roads, agriculture, water resources, aviation, entertainment, mines and steel, solid minerals and other other areas that can generate employment, Okonjo-Iweala said.

More than 30 million Nigerians, or 20 percent of the population are unemployed, officials said.

Nigeria is targeting "a realistic GDP growth of between seven and eight percent over these years," a single digit inflation, and staying within three percent fiscal deficit, she said.

"So we will try to drag the budget to be not more than the 3 percent fiscal deficit and trending down over the next four years," she added.

"We will need to change the structure by reducing the recurrent expenditure. Recurrent expenditure is about 74 percent of the total expenditures now and the we want to drag this down by a percent plus yearly over the next four years."

"By 2012, we hope to drag it down to about 72 percent," and below 70 percent by 2015, said the minister.

The government hopes to increase capital spending by 1.5 percent per year, she said, adding that capital spending has been stagnant at 25 percent of the budget for some years.

The 2012 budget is expected to be presented to the parliament next month or in November for approval.

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