Nigeria expects its federal fiscal deficit to come in below target this year as higher revenue and lower borrowing costs ease pressure on the West African nation's budget, Finance Minister Taiwo Oyedele said. The continent's top oil producer and refiner had targeted a fiscal deficit of 4.2% of gross domestic product this year, but the government plans to revise that forecast lower. "We think it will be narrower than the 4.2%," Oyedele said in an interview in London. "The priority is the cost of debt relative to revenue and that already is moving in the right direction."
The outlook for the federal government differs from the broader fiscal picture. The World Bank expects Nigeria's consolidated budget deficit, which includes state and local governments, to widen this year as stronger capital spending by states and rising federal personnel, interest and pre-election spending outweigh higher revenue. Oyedele disputed concerns about the debt burden after World Bank data showed first-half interest payments exceeded federal government revenue by 24%. The Finance Ministry said the comparison overstates the burden because the interest figure includes obligations serviced on behalf of other tiers of government.
The country's total public debt rose 21% to $121 billion as of June from a year earlier. The central bank cut its benchmark rate by 350 basis points to 23% in September, and the average sovereign-bond yield dropped for the sixth straight day to 16.5% on Wednesday. The government plans to announce a new fiscal-deficit target after a review.
"We don't think it will be worse than the target; we think it will be better," Oyedele said.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing