NewsWest AfricaNigeria 2014 budget delayed again

Tue,29Jul2014

Posted on Wednesday, 20 November 2013 12:03

Nigeria 2014 budget delayed again

By Konye Obaji Ori

Central bank governor, Lamido Sanusi said rates were on hold because there were concerns about the inflationary effect of fiscal spendingNigerian President Goodluck Jonathan has withheld the proposed 2014 budget from the national assembly, due to an ongoing disagreement between his team and lawmakers over his administrations' plans to curb spending.

Jonathan's administration asserted that a budget would be presented as soon as the Senate and House of Representatives coordinated their position on the Medium Term Expenditure Framework (MTEF).

It is somewhat fitting that Nigeria's budget proposal for 2014 has been delayed again

 

The Senate has approved the MTEF based on a benchmark of 76.5 dollars per barrel of oil, while the House of Representatives relied on a benchmark of 79 dollars per barrel.

"It is not feasible for me to present the budget in the absence of a harmonised position on the MTEF.

"In the circumstance, it has become necessary to defer the presentation of the 2014 budget to a joint session of the National Assembly until such a time when both chambers may have harmonised their positions on MTEF," a statement from the presidency to the Senate President, David Mark on Tuesday, reads.

Aside from the MTEF disagreement between the Senate and House of Representatives, Jonathan's administration proposes to cut government spending, but lawmakers have indicated they wish to raise spending in the budget for next year.

The spending rift between the administration and lawmakers has political implications ahead of the 2015 elections.

However, Nigeria's central bank warned it would tighten interest rates if pre-electoral spending surges.

Investors usually get nervous about high spending before polls.

"It is somewhat fitting that Nigeria's budget proposal for 2014 has been delayed again on a day when the central bank has voiced its concerns over fiscal slippage," said Shilan Shan, economist at London-based Capital Economics.

Nigeria's economic growth quickened to 6.8 percent year-on-year in the third quarter, and interest rates have steadied at 12 percent for the thirteenth time in a row.

Central bank governor, Lamido Sanusi said rates were on hold because there were concerns about the inflationary effect of fiscal spending on the economy ahead of 2015 elections.

"It is the year in which election spending is likely to take place domestically, thus bringing more pressure to bear from the fiscal side. As a result, we are not yet at the end of the tightening cycle," Sanusi said.

Nigeria has grown as an investment destination because fiscal and monetary stability has improved.



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