As the general elections are around the corner, the Nigerian President Muhammadu Buhari took great care to present an 8.83 trillion naira ($28.80 billion) budget for 2019. Can he drive the lackluster economic growth between now and the elections, which is only two months from now? Indeed, he laid out a plan, which many feel is more of election propaganda and less of a growth strategy to take the sagging economy to the pink of health. Buhari, in the last election, had come to power by promising everything from more employment, elimination of insurgency and focus on agriculture and industry. But the results on the ground belie expectations.
There are apparently several caveats for the Budget 2019. Foremost is that it assumes that the oil production will be 2.5 million barrel a day and the price at US$ 60 per barrel. Many feel that production target entirely depends on the demand and other factors. There are indications that crude prices may fall below US$ 55 per barrel. The price would come down further if the OPEC and the US continue with their production targets. The slowing down of China, which is an oil guzzler is another reason for oil demand dithering. The oil futures are already showing signs of that impending demand squeeze.
Wall Street and Federal Reserve are also skeptics about the US growth rates, though, for the present, it is picking up. The ongoing trade war between the US and China, and the hit the US stock market is taking in the recent days are interpreted by the financial analysts as the onset of a recession. Federal Reserve has already sounded the warning and has raised the interest rates day before. One has to see how it could impact the US economy. The overarching issue is how far the Trump administration can have their writ large given that he lost control over the House of Representatives and one scam or the other is erupting every day. These vituperative politics would adversely affect the growth tempo of the US economy, which may adversely affect the demand for oil. That will signal a lower price for oil, a factor that can throw the Nigerian economy and the proposed Budget to a tailspin.
Buhari’s Budget has expectedly come under attack from the opposition. They are highly critical of Buhari’s handling of the economy. The main opposition candidate, businessman and former vice president Atiku Abubakar, has given thumbs down to the Budget. He has promised, if elected, to double the Nigerian economy to $900 billion by 2025. Significantly, the spending plan is smaller than the record 9.12 trillion-naira budget for 2018 that he signed into law in June. Parliament still will have to approve the Budget before it is made into a law. Importantly, it took months together for the last Budget to become a law. Then how can one believe that the present Budget would ever be made into a law, given that the return of the present dispensation itself shrouded in uncertainty?
