Nigeria to Bolster Spending, Sees Budget Gap Stable

Nigeria‘s government unveiled record spending plans for next year as it bets that a swift recovery in Africa’s biggest economy will help keep its budget deficit stable.

President Muhammadu Buhari presented a budget of 13.1 trillion naira ($34 billion), up 21% from this year. The government expects the fiscal deficit to remain steady at about 3.6% of projected gross domestic product.

The economy of Africa‘s biggest oil producer is likely to have contracted in the third quarter and entered its second recession in four years, Buhari told lawmakers Thursday in the capital, Abuja. Next year, it’s likely to expand 3%, he said.

Projected growth for next year is realistic, but the legislature‘s poor record of approving budgets on time could affect expenditure, analysts at a unit of South Africa’s FirstRand Ltd. said in a research note.

The government plans to plug the budget shortfall by borrowing as much as 4.28 trillion naira from domestic and foreign markets. Thats less than the 5.4 trillion naira approved for this year that consisted mostly of domestic bond sales and concessional loans from abroad.

While the coronavirus pandemic has hit domestic demand and capital inflows, the worst may be over for the West African nation, according to Fitch Ratings. The company last month revised its outlook for Nigerias credit rating to stable from negative, citing more stable oil prices and easing global conditions.

(Adds analyst comment in fourth paragraph. An earlier version of this story corrected percentage change in size of budget in second paragraph.)