2019 Budget – Has the fiscal cycle and dynamics changed?

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The Senate recently passed the 2019 Appropriation Bill of N8.9tn – roughly five months after it was presented to the National Assembly. However, the bill must still pass through a final hurdle of presidential assent, and If the past 9-year fiscal cycle is anything to go by, the probability that we could see a presidential assent this month is 44.0%.

2019 Budget - Has the fiscal cycle and dynamics changed? - Brand Spur

The bill (N8.9tn) is N86.0bn higher than the initial proposal of N8.8tn presented by President Muhammadu Buhari to the National Assembly. This increment reflects increased allocations to security services to enable them to tackle rising insecurity challenges, as well as the inclusion of severance allowances for outgoing legislators. Effectively, this brings the official projection for fiscal deficit to N1.9tn (1.4% of GDP).

In addition, the budget is predicated on ambitious revenue expectations such as an oil production target of 2.3mb/d. Meanwhile, the last time production reached this level was in 2014 and we do not think this level of production is attainable this year, amid high operational risks and regulatory bottlenecks – not to mention the
force majeure recently declared by two international oil companies. Clearly, such overly optimistic revenue expectations would continue to create scope for under-implementation of Nigerian budgets.

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