Abuja: Although the oil-rich African nation Nigeria looks upon India and China as role models, President Goodluck Jonathan warned that “downside risks” exist for both while presenting his $29.29 billion “stepping stone” budget proposal to the parliament.
“… although many emerging and developing countries, like India and China are experiencing relatively robust growth, downside risks remain as well. In fact, global growth projection has continuously been revised downward and is now four per cent for 2012-2013,” Jonathan said.
Nigerian President Goodluck Edbele Jonathan. Getty Images
However, recurrent expenditure which takes much of previous budgets would fall to 72 percent from a previous figure of 74.4 percent as deficit narrows to 2.7 percent of GDP from a previous 3.6 percent, he said on Tuesday.
The government, Jonathan said, would focus more on capital projects with an expected oil price of $70 per barrel at a daily production of 2.48 million barrels.
The president told parliamentarians the euro zone crisis has thrown financial markets into turmoil and made many countries continue to face difficulties in servicing their debts.
According to him, these developments have implications for Nigerian economy as, aside from the impact on the inflow of Foreign Direct Investments, they could also lead to lower demand for primary export commodity.
“We are living witnesses to the extent of volatility that can afflict the international oil market with prices plummeting from $147 per barrel in July 2008 to about $38 per barrel four months later,” Jonathan said.
The budget proposal was based on an exchange rate of 155 Naira, which is the country’s official currency to the US dollar.
It also anticipated an inflation rate of 9.5 percent and GDP of 7.2 percent.
Nigeria’s economy is highly dependent on crude and in the past militant activities in the Niger Delta region, where the mineral resources abound, hampered production.
An amnesty programme for militants organised by the government has restored normalcy in the region, however, economists have recommended a shift from oil dependency to industrialisation or diversification to other mineral resources available in the country.
Finance Minister Ngozi Okonjo-Iweala said the country has capacity to join the BRIC nations in the near future if the economy is well managed.
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