ABUJA (Reuters) - Nigeria expects its budget deficit to double to 2.2 trillion naira ($11 billion) in 2016 as the government plans to revive a flagging economy by tripling capital expenditure, President Muhammadu Buhari said on Tuesday.
Africa’s biggest economy will borrow as much as 900 billion naira abroad to fund the deficit, which equals 2.16 percent of gross domestic product, Buhari told parliament. Some 984 billion naira would be borrowed at home.
The budget drawn up for 2015 by the previous government had envisaged a year ago a deficit equal to just 0.79 percent of GDP.
Nigeria’s economy has been hammered by a plunge in oil prices which has weakened the naira, delayed the payments of civil servants and forced companies to fire thousands of staff.
The West African nation expected revenues of around 3.9 trillion naira next year, of which only 820 billion naira would come from key oil revenues, Buhari said.
Tax collection will be improved and non-oil industries such as agriculture and mining promoted, he added.
Despite the depressed oil prices, Buhari expected Nigeria’s economy to grow by 4.4 percent next year. The central bank governor had warned in September that Nigeria’s economy might slip into recession without a stimulus.
In the third quarter of 2015 economy growth slowed to 2.84 percent from 6.23 percent a year earlier. The previous government’s budget had pencilled in growth for all-2015 of 5.5 percent.
“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 Buhari, who was elected in March on pledges to tackle graft and economic mismanagement which have left many Nigerians mired in poverty.
The total budget volume would be 6.08 trillion naira, of which 1.8 trillion would be spent on capital expenditure — three times more than this year — to make Africa’s biggest economy more “competitive”, Buhari said.
The central bank has resisted calls by investors to further devalue the naira despite a fall in oil revenues.
“We are carefully assessing our exchange rate regime keeping in mind our willingness to attract foreign investors,” Buhari said. “Nigeria is open for business. But the interests of all Nigerians must be protected. Indeed, tough decisions will have to be made.”
($1 = 199.0000 naira)
Reporting by Mayowa Oludare, Camillus Eboh and Felix Onuah; Writing by Ulf Laessing; Editing by Gareth Jones