2018 budget signed off, no time to lose

The journey of the 2018 budget has finally ended with the presidential sign-off on 20 June, more than seven months after the proposals were first submitted to the National Assembly. The presentation of the budget by the federal minister of budget and national planning stresses the continuity with what it terms the “reflationary” budgets of 2016 and 2017, and the Economic Recovery and Growth Plan 2017-20. The buzzwords of the presentation are infrastructure and capital spending.


  • Total FGN expenditure is projected at N9.12trn, compared with actual and budget figures of N6.05trn and N7.44trn for 2017.
  • Capital spending is projected at N2.87trn, compared with N1.58trn actual for 2017 (through to earlier this month), which the presentation terms a record. The largest ministerial beneficiary is the federal ministry of power, works, and housing (N683bn).
  • Among the many projects listed are N15bn for the recapitalisation of the Bank of Agriculture and Bank of Industry, and N13.3bn for the revived export expansion grant.
  • The FGN generally does not hit its targets for spending because of underperformance in revenue collection, and 2018 is unlikely to be any different. Total FGN revenue is projected at N7.17trn, compared with actual and budget figures of N2.71trn and N5.08trn for 2017.
  • The total is highly ambitious. However, we note that the FGN expects to gather less in non-oil taxes than it did in 2017, which we consider a realistic assessment of the scale of the challenge.
  • The total is substantially higher than in the 2017 budget because of new measures to raise oil revenues, and more bullish oil price and production assumptions. We notice also a N710bn projection for joint-venture equity restructuring and look forward to some colour on the subject.
  • The FGN deficit is projected at N1.95trn, representing 1.74% of forecast GDP. In addition to unspecified privatisation proceeds of N306bn, the deficit will be financed by N1.64trn in new borrowing. In line with the strategy of externalisation, the greater part of the borrowing (N849bn) is to be foreign.
  • The FGN has already indicated that, once the new budget was approved, its priority would be to disburse unused capital items of about N500bn from the 2017 budget. In the light of the electoral calendar, we should expect a healthy pace of capital releases in the months ahead.

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