Familiar territory for the new order
The Buhari presidency and the APC secured a strong popular mandate in elections in March 2015, and enjoy widespread international goodwill. Their agenda is to diversify the economy away from oil and replace the rentier model. Previous administrations have gone down this road and abandoned the journey in the face of opposition from vested interests.
Focus on the fiscal
The FGN seeks to achieve its agenda fiscally, and does not expect to be rescued by a marked recovery in the oil price. Its fiscal plans are expansionary to allow for higher capital spending, funded by sharply increased non-oil revenue collection. This will require sizeable efficiency gains, anti-fraud measures and the squeezing of unremitted dues from all taxpayers. We do not think the FGN is fiscally irresponsible, and expect it to trim spending in the event of revenue underperformance.
An unexciting growth dividend this year
We see a pick-up in GDP growth to 4.5% in 2016 on the back of fiscal expansion and sector-specific reforms. Over time, household consumption will recover, leading to an acceleration in growth.
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