Nigeria's expansionary spending plans this year are "unsustainable" and will drain the OPEC member's windfall oil savings if not controlled, junior finance minister Remi Babalola said on Friday.
President Goodluck Jonathan last month signed into law a 4.6 trillion naira budget, increasing planned expenditure by around 50 percent from last year. But it also risks saddling sub-Saharan Africa's second-biggest economy with a budget deficit of more than 5 percent.
Babalola said government revenues, mainly from monthly oil sales, were not enough to fund planned spending of 1.5 trillion naira in the first quarter of this year.
Africa's biggest energy producer will likely need to use its windfall oil savings to pay for the three-month shortfall estimated at around 737 billion naira, he said.
Nigeria had $4.4 billion in oil savings at the end of April, up $300 million from March.
"We may thus be constrained to consider amending the revenue profile of the 2010 budget or re-negotiate with all relevant stakeholders the monthly distributable amount pending improvements in the budgeted revenue profile," Babalola said.
Deficit-funding options
The minister said President Jonathan had yet to approve the draw-down from the excess crude account, which Babalola says is already "below a comfortable cushion".
"If we embark on any form of fiscal profligacy today it will certainly hinder our ability to address the various fiscal challenges we are likely to face in the near future," he said.
Nigeria saves any oil revenue above a benchmark price into the account, a pillar of IMF-backed reforms launched in 2003 that aimed to help insulate the economy from volatility in global oil prices.
Jonathan has approved the disbursal of $3 billion from the account to the country's 36 states and government agencies since February.
Nigeria's windfall oil savings are less than a quarter of where they stood in 2007.
Nigeria is also pursuing other options to fund its growing fiscal deficit, including plans to issue a $500 million debut global bond and the use of IMF loans worth $915 million.
REUTERS
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