Expansionary budget, revenue permitting

The 2018 budget projects a 25.0% increase in total spending to N9.12trn. The allocations in the Appropriation Bill reflect the FGN’s agenda: so the largest increase on the 2017 budget is 39.5% for capital items, and the lowest 19.7% for recurrent expenditure. Governments, however, prioritize the salaries of their employees, and release funds for capital programmes when the opportunity arises. On paper, the allocation for the latter exceeds the FGN’s broad objective of 30% of total spending. In practice, releases hinge upon revenue generation.


  • However we define the timeframe of the 2017 and 2018 budget years, the bill is clearly expansionary (ie the rise in spending is well above prevailing inflation).


  • The bill would not appear to allow for an increase in the national minimum wage. The 19.7% rise in the recurrent budget falls short of the increase in personnel spending of about 25% that followed the rise in the wage before the 2011 elections. The National Assembly indicated that a supplementary budget would be required.


  • In line with the FGN’s priorities set out at the start of the administration, there are allocations for its special intervention programmes of N350bn (recurrent) and N150bn (capital). These are unchanged from 2017.


  • The N2.20trn allocation for debt service includes a contribution of N190bn to the sinking fund (N177bn in 2017). External debt payments represent just 14% of domestic, reflecting the positive interest rate differential and the budget’s plausible assumption of exchange-rate stability.

Sources: Budget Office of the Federation; FBNQuest Capital Research
  • In recurrent spending, we note an unchanged allocation of N65bn for the presidential amnesty programme (reintegration of ex-militants).


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