Nigerian Budget Experiences Increase

According to an article by Reuters posted March 25, the Nigerian Parliament recently approved a dramatic increase in Nigeria's budget. The augmented budget is designed to stimulate the Nigerian economy, which has declined substantially in wake of the global recession. However, this plan can theoretically contribute to the national deficit rising to 5 percent of the GDP. The proposed budget passed both houses of the Parliament overwhelmingly, revealing the government's hopes of finally clamoring out of these troubled economic times. Whereas many countries are recovering from the economic downturn, Nigeria has had almost no progression due to a credit freeze following last year's $4 billion bank bailout. In a move that reveals a nation attempting to revitalize stagnant industries, nearly one third of the 4.079 trillion naira budget is designated for improving Nigeria's infrastructure and power sector, along with developing the oil-rich Niger Delta.

The proposed national debt increase from the 2010 budget lies at 1.52 trillion naira (150 naira = 1 dollar), but analysts fear the number might be higher if poorly managed. Though the budget is widely supported, the omnipresent threat of governmental corruption might destroy the goals of the country and smother it with even greater debt. Furthermore, the budget demonstrates Nigeria's reliance on oil. It assumes that the oil price will on average be $67 per barrel and oil production of 2.35 million barrels per day and if either numbers drop, the national deficit would undoubtedly grow significantly. Nigeria is wagering heavily on the success of this new budget, for if it fails, it would likely concern investors and result in a country who is still incapable of escaping the economic downturn.

Nigeria's planned budget and resulting spending on the countries infrastructure appears somewhat similar to FDR's "New Deal" plan. Both attempted to improve dismal economies by pumping money and supplies into stagnant industries. However, several aspects of Nigeria's political culture and economic practices can potentially derail the government's efforts. For one, corruption and government offices are frequently inseparable. The legitimacy of the government has been severely damaged by repeated cases of politicians pocketing funds which were meant to go to public services. Furthermore, the proposed budget exemplifies Nigeria's reliance on a sole commodity-- oil-- to help recover from the increased deficit. Having a significant portion of the success of the budget tied to oil is dangerous, as a decline in the price or production might result in further economic woes.

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