AFP – Nigeria’s president signed off Friday on a $31 billion budget for 2012 in Africa’s largest crude producer amid concern it has not done enough to guard against a possible future slide in oil prices.
President Goodluck Jonathan signed the spending plan that amounts to a total of 4.88 trillion naira (25 billion euros, $31 billion), including a number of projects not counted as part of the official budget.
It sets the benchmark oil price at $72 per barrel — a key figure since revenue earned above that amount is meant to be put in a savings account.
“The robust growth experienced in recent years needs to be translated into tangible and concrete improvement in the living standards of our people,” Jonathan said in a speech to mark the budget signing.
“In this respect, the government is focused on investments in priority sectors in order to sustain economic growth and create jobs.”
Nigeria has largely failed to capitalise on its vast oil wealth and potential as Africa’s most populous nation due to corruption and mismanagement.
The country’s infrastructure is woefully poor and the population suffers daily cuts in electricity.
An oil revenue savings account has also been depleted in recent years owing to bigger spending on a variety of items.
“Rising oil revenue has helped to mask a poor revenue performance from the rest of the economy, but it has also created the basis for ever-increasing amounts of spending, making the country more vulnerable to any oil-related shock,” Standard Chartered analyst Razia Khan recently wrote.
“In the absence of high oil prices, current spending levels may be unsustainable, but cutting back may be unfeasible politically.”
At the start of the year, Jonathan sought to eliminate fuel subsidies, a programme that has represented about a third of the budget and which is widely viewed as riddled with corruption.
But mass protests and a week-long general strike forced the president to partially reinstate the subsidies, which Nigerians view as their only benefit from the nation’s oil wealth since they keep petrol pump prices low.
Security-related expenses also account for much of Nigerian spending as it faces an insurgency by the Islamist group Boko Haram that is focused in northern parts of the country.