Nigerian government spending has not slowed in the absence of President Umaru Yar’Adua and the economy is on course to grow a minimum of 6 percent this year, Finance Minister Mansur Muhtar told Reuters.
Yar’Adua has been in hospital in Saudi Arabia for more than two months being treated for a heart ailment but has not formally transferred powers to Vice President Goodluck Jonathan.
He signed a supplementary 2009 budget which runs to the end of March from his sickbed but there has been concern over what will happen if he is still absent at the end of next month and is unable to sign the 2010 budget.
“I want to give you strong assurance that the growth trajectory and prospects for the Nigerian economy remain positive. We have not relented in our efforts to steer the economy and the vice president has been actively engaged,” Muhtar said in an interview in Abuja.
“We have a very positive outlook of maintaining a minimum of 6 percent GDP growth. This is going to be fuelled basically by stimulus spending and a massive increase in spending on infrastructure embedded in the 2010 budget,” he said.
Yar’Adua in November sent a 4.1 trillion naira ($27 billion) budget proposal to parliament, a 32 percent rise from planned 2009 spending. If approved, this would push sub-Saharan Africa’s second biggest economy to a fiscal deficit of 4.79% of gross domestic product.
Sources involved in the debate have since said parliament wants to increase the planned budgetary spending further to pay for new projects in power, roads and development in the restive, oil-producing Niger Delta.
Muhtar said Nigeria’s budget laws meant the government was able to start spending funds for the first quarter of the 2010 budget based on last year’s assumptions even though it had not yet been passed into law, as well as spending funds brought over from last year and the 2009 supplementary budget.
“In effect, for the first time in Nigeria, we are actually executing three budgets this quarter,” he said, noting that the cabinet had continued to award contracts in Yar’Adua’s absence.
Muhtar confirmed parliament had agreed to increase the benchmark oil price assumption in the 2010 spending plans to $60 a barrel from an initial proposal of $57, saying current oil prices of around $70 would still leave a comfortable margin that would compensate for any production shortfall.
He said foreign reserves of around $43 billion were sufficient to meet all domestic and external obligations.