We have lift off!

On Monday the vice president, Yemi Osinbajo, signed the 2017 Appropriation Act (budget) into law, more than one month after it had been passed by the National Assembly. At this point only the aggregate figures are available from the local media. When we compare the totals with those in the president’s speech to the assembly in December and the federal budget minister’s overview shared in the same month, we find that the deficit is unchanged at N2.36trn. Aggregate revenue and spending have been increased in the intervening five months by just N140bn.

The FGN’s fiscal stance is characterised as expansionary. In real terms the projected increase of 23% in spending over the 2016 budget is ahead of average annual inflation, which is currently running at 18% y/y.

So we have a modestly expansionary budget but one with limited firepower. The ministry’s overview estimated aggregate spending at 6.7% of projected 2017 GDP, which it compared with ratios for 2015 showing 19.2% for Ghana and 20.7% for South Africa. The comparison is a little distorted by Nigeria’s federal structure because state and local government spending is excluded. The broader point is that the impact of FGN spending is blunted by its feeble revenue collection.

In the overview capital outlays are projected at N2.24trn. This would mark an impressive increase on the N1.20trn the FGN has reported for the 2016 fiscal year extended through to early May.

The overview also shows personnel spending contained to N1.88trn.

The vice president told the media that the assembly had substituted some of the FGN’s priority capital programmes for its own. This does not encourage hopes that the budget process will become smoother henceforth.

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