Nigeria's economy will grow 5.5 percent in 2015, down from an earlier projection of 6.4 percent, due to lower oil revenues, according to the budget the finance minister presented to parliament on Wednesday. The naira lost 3.6 percent on the day, closing at a record low of 187.10 to the dollar, after the central bank said it would hold the last foreign exchange auction of the year on Wednesday, which triggered strong demand from some importers and forex end-users.
The currency rarely reacts to budget news. The 4.3 trillion naira ($23 billion) budget rests on a benchmark oil price of $65 a barrel, down from $77.50 in the 2014 budget, and a significant cut on previous budgets, Finance Minister Ngozi Okonjo-Iweala said. Revenue was 3.6 trillion naira.
The production forecast for oil was set at 2.27 million barrels per day, down slightly from this year's assumption of 2.38 million. The figures were in line with earlier comments by the minister this month. Oil only accounts for about 15 percent of the GDP of Africa's biggest economy, but it makes up 75-80 percent of government revenues. Government finances have been hammered by a near halving of world oil prices since June.
"The budget seeks to protect the average Nigerian and you know that the key is that we focus on diversification of the economy," Okonjo-Iweala told journalists outside parliament. "This budget points to the fact that this country is a non-oil country and I think we want Nigerians to begin to think of the country in that way." Yet efforts to diversify over the years have had mixed results, and oil dependency is seen as the Nigerian economy's biggest systemic flaw. Global investors have take been growing interest in Nigeria, but they worry about its tendency to squander its oil windfall on bloated government spending and patronage.
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