Nigeria’s Buhari signs record spending bill into law, despite weak economy

Abuja, July 10, 2020 – Nigerian President Muhammadu Buhari on Friday signed into law a budget with record spending despite the risk of a slump in oil revenue. The 2020 budget of 10.81 trillion naira ($2 8.38 billion) was approved by parliament in June after Buhari called for a raise to the original request of 10.59 trillion naira. In a ceremony in the capital Abuja, Buhari said the increase of 216 billion naira was a “response to recent developments, in particular the COVID-19 pandemic.”

Nigeria, Africa’s biggest crude producer, relies on oil sales for 90 percent of foreign exchange earnings. Buhari noted that global crude prices had tumbled from a high of $72.20 per barrel in January to below $20 per barrel in April. They have since hovered around $40. The revised budget is based on assumptions of $28 per barrel as against $57 previously. Nigeria has also reduced its crude output in line with Organization of Petroleum Exporting Countries (OPEC) efforts to strengthen the oil market. “Global trade has generally been disrupted as almost all economies were locked down for protracted periods in the wake of the COVID-19 Pandemic,” Buhari said.

But he added that the government was well-positioned to safeguard the economy, thanks to the revised budget and a N2.3-trillion stimulus programme. In February, credit rating agency Moody’s listed Nigeria “among countries (in West Africa) whose situation causes the most concern in terms of debt sustainability.” On April 28, the International Monetary Fund (IMF) approved $3.4 billion in emergency financing for Nigeria to help deal with the economic fallout of the pandemic.

AFP