Nigeria looks set to maintain its record 2020 budget of more than 10.5 trillion naira after a boost to healthcare spending to fight the novel coronavirus outweighed an earlier cut to cushion the impact of an oil price crash.
Reuters reports that Finance Minister Zainab Ahmed said on Wednesday that the Cabinet approved a revised 2020 budget of 10.52 trillion naira, lower than 10.59 trillion naira approved in December by President Muhammadu Buhari.
She said spending related to COVID-19 had not been previously captured.
Ahmed told reporters the budget revisions approved at Wednesday’s ministerial meeting assumed an oil price of $25 per barrel along with output of 1.94 million barrels per day and an exchange rate of 360 naira to $1, a framework for its 2020-2022 spending plan.
The proposals require parliament’s approval before being signed into law by the president.
With global oil prices plunging, the government had said this 2020 budget would shrink by about 15% and that it would switch to domestic naira borrowings. However, Ahmed said on Wednesday that the reduction amounted to just 71.5 billion naira to “adequately respond to the COVID-19 pandemic”.
The coronavirus outbreak and an oil price plunge have magnified headwinds in the Nigerian economy, which relies on crude sales for government revenues, triggering a historic decline in growth and large financing needs as well as weakening the naira.
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The government expects the economy, which recently recovered from a 2016 recession, to shrink by 3.4% this year.
Africa’s most populous country recorded its first confirmed coronavirus case in late February. There have been 4,787 recorded cases and 158 deaths out of 200 million inhabitants.
Ahmed said the budget would be financed from local and foreign borrowings as well as proceeds of privatisation to the tune of 5.36 trillion naira to plug the deficit. She did not identify the assets to be sold.
International lenders include the International Monetary Fund (IMF), which last month approved $3.4 billion in emergency financial assistance for Nigeria, the World Bank, Islamic Development Bank and Afrexim Bank, Ahmed said.