Daily Insight: 2018 Budget Passage: Has the Fiscal Cycle Changed?

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Earlier in the week, the 2018 budget was passed, six months after it was presented to the National Assembly. However, the budget must pass through a final hurdle of a Presidential assent.

The Senate increased the 2018 budget to N9.1tn, N500.0bn above the N8.6tn proposed, and revised the benchmark oil price assumption from $45/b to $51/b. The bulk of the increment went into CAPEX (now N2.9tn from N2.4tn) and debt servicing (now N2.2tn from N2.0tn). Non-debt recurrent spending was maintained at N3.5tn while all other assumptions of the budget were left unchanged.

Recent comments by the Finance Minister indicated that the 2017 budget was closed out just a few days ago, with record N1.5tn capital spending. It would appear that the fiscal cycle has changed from December to the middle of the year, even if there is no official statement to that effect. In fact, it is worthwhile to note that over the last 10 years, Nigerian budgets have been passed 6times in May, 3 times in April, and only once in March or February, even though proposals were presented
either in November or December. Away from the timing, budget execution remains broadly underwhelming, resulting in the weak economic impact. Finally, there is a need to ensure that the fast-rising budget estimates observed since 2015 result in noticeable positive feedback on the economy.

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