Nigeria's president on Wednesday unveiled a $31 billion dollar budget for 2013 in Africa's largest oil producer, pegged to a benchmark oil price of $75 per barrel. Goodluck Jonathan has faced calls to align spending with a higher predicted oil price closer to $80 per barrel but veered to the more modest figure, a move aimed at increasing savings and guarding against market volatility.
Revenue earned above the benchmark goes into a savings account that has been depleted in recent years by a variety of spending. Last year's benchmark was $72 per barrel. Jonathan has made moves to replace this poorly monitored and occasionally raided savings account with a sovereign wealth fund, hoping to better manage oil income, but he has faced resistance from various camps.
The 4.92 trillion naira ($31.3 billion, 24.3 euros) 2013 budget marked a 3.5 percent increase over 2012 spending. Education, at 426.5 billion naira, topped defence (348.9 billion naira) as the highest expenditure area. In January, Jonathan tried to scrap a fuel subsidy programme that was badly managed and marred by corruption, which cost the government billions of dollars a year to maintain.
The subsidy was however popular across the country as it kept pump prices low and plans to scrap it sparked massive protests. Jonathan was forced to partially re-instate the subsidy, with petrol now fixed at $0.60 a litre. Analysts say Nigeria may have to borrow funds in order to meet its 2011 subsidy obligations and 2012 payments could put even more strain on the federal budget.
Nigeria has seen GDP growth of around seven percent in recent years, though economists warn it is not enough to result in the kind of development needed in a country sorely lacking infrastructure and where most of the 160 million inhabitants still live off of $2 per day. Crude production in August hit its highest-ever level at 2.7 million barrels per day, but the 2013 budget was based on 2.48 million barrel production forecast.