Nigeria’s 2020 budget plans could prove impossible

Subject

Nigeria's 2020 budget.

Significance

President Muhammadu Buhari on October 8 proposed a 10.3-trillion-naira (28.4-billion-dollar) budget for 2020. The budget plans to increase spending on much-needed infrastructure, while deficit financing trends also look set to continue with a proposed 2.18-trillion-naira deficit. However, the proposed budget is plagued by the same challenges that have crippled previous Buhari plans, namely overly optimistic revenue expectations.

Impacts

• A curtailing of infrastructure spending, combined with the high interest rate environment, will likely limit the economy's growth potential.
• Increased compliance costs could hurt an already diminished investment reputation and future World Bank ‘ease of doing business’ rankings.
• An easier relationship between the presidency and the national assembly should see the budget passed without the major delays of past years.