Focus on the budget space
The success of the Buhari agenda rests upon whether its expansionary fiscal stance will deliver the capital spending and the jobs to make its contribution to a revival in the economy. This, in turn, requires that it comes close to hitting its ambitious targets for non-oil revenue generation. These are heady projections and the impact of the 2016 budget will not be felt much before the end of the year. Beyond the fiscal, the FGN would do well to clarify its policies and trumpet its successes, given the limits on the patience of voters and markets.
No rescue likely soon from the oil price
The oil price has picked up from its recent floor in January and the budget assumption of US$38/b has started to look conservative. That said, the global supply/demand balance for crude is set to remain out of kilter until late 2017. Inventory accumulation, data-driven China worries and an uncompromising Saudi stance militate against an earlier recovery. We see an end-2016 spot price for Bonny Light of US$55/b.
Unexciting growth this year and next
Growth of 2.1% y/y in Q4 2015 was the lowest in the revised series of national accounts. A combination of government spending, sector-specific reforms and a modest rise in oil revenues should deliver unexciting growth of 3.5% in 2017.
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