Nigerian budget signed into law by Muhammadu Buhari

Muhammadu Buhari has signed the 2016 budget into law after weeks of squabbling with lawmakers had further delayed the government’s plan to pull the country out of economic crisis with a record spending spree.

In a speech in the capital, Abuja, Mr. Buhari said the 6.06tn naira ($30bn) budget would “trigger concerted efforts to reflate the Nigerian economy”, suffering its worst slowdown in years due mainly to the crash in the price of oil.

The president said his administration chose an expansionary fiscal policy approach; it plans to run budget deficits for the next two to three years, despite the sharp decline in government revenues from oil exports because it believes “growth-enhancing” state spending on infrastructure is needed to change the structure of the economy.

The petroleum-dependent economy faces a balance of payments crisis. The central bank is rationing foreign exchange, hurting the non-oil sectors of the economy, such as manufacturing and shipping, and driving up food prices.

Analysts warn that the sharp drop in capital inflows, which investors and economists blame on the government’s policies, could drag down growth this year below the International Monetary Fund’s latest forecast of 2.3 per cent, the lowest in 15 years.

The budget assumes oil production of 2.2bm barrels a day at $38 a barrel, although output is currently just 1.7-1.8 b/d, due partly to a February attack on a Shell-operated terminal that remains closed.

The delayed budget has “significantly hurt business”, said Ayodeji Ebo, analyst at Lagos-based Afrinvest. “Contractors have been waiting for projects, and cash inflow for this capital expenditure which is supposed to inflate the economy and provide jobs has not happened.”

Mr Buhari’s critics say the administration is not acting with enough urgency to address the barrage of economic problems, some of which the president says are the result of profligate waste and graft under the previous government.

The president says fixing broken institutions will take time. On Friday, he once again urged Nigeria’s more than 180m citizens to have patience.

Those around him have also warned that haste in matters such as signing the budget, which was approved by the national assembly in March, could allow high-level corruption to continue. Mr. Buhari said there was a lack of detail in the version approved by lawmakers, which led to the delay.

Jump-starting the economy through the infrastructure spending proscribed in the budget could be held back further by delays in securing funds to plug the $11.6bn deficit. Talks with the World Bank and African Development Bank over $3.5bn in loans have not yet yielded a deal.

The finance minister last month said Nigeria was considering tapping the Chinese and Japanese bond markets in search of the “cheapest possible money”.