Nigerian President Umaru Yar’Adua presented his deficit budget to the National Assembly on December 2, which projects economic growth of 8.9% in 2009 – a rate which is heavily dependent on the price of oil.
Umaru Yar’Adua announced that tax revenue would amount to just NGN1.77 trillion in the budget. The Nigerian President said it was crucial for the Nigerian government to run a deficit this year, as there was great need for improvements to infrastructure in order to progress.
Within Yar’Adua’s plans, NGN797bn will be allocated to updating infrastructure to improve Nigeria’s business environment and a further NGN88.5bn will be invested on improving the electricity supply, with NGN77bn being invested on improvements in the Niger Delta oil-producing region.
Many experts fear that the government’s projections don’t incorporate recent trends in oil prices with one leading economist projecting 6% growth if oil prices continue to fall. Oil products account for 80% of government revenues and 90% of Nigerian exports.
The projected budget deficit of NGN1.1bn will be financed by ongoing privatisation, the recall of USD200m from the Nigerian Trust Fund of the African Development Bank, a Naira-denominated international bond issue of USD500m and surpluses from the 2008 budget.
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