IN THE DAYS before Mr Buhari’s inauguration, wags in Abuja’s watering holes were joking that the new finance minister would find a note on his desk: “Sorry, there’s no money left.” They had a point: lower oil prices and the profligacy of Mr Jonathan’s government have hit Nigeria’s finances hard.
Oil contributes only about a tenth of Nigeria’s GDP, but directly accounts for around 70% of government revenue. Add in indirect taxes, and its contribution rises to about 85%, government officials say. When oil prices were high, there should have been plenty of money to run the country while also saving for a rainy day. Yet over the past two years the government spent when it should have saved.
Government officials are now frantically trying to plug the gaping hole in the public finances that the fall in oil prices has opened up. The value of Nigeria’s oil exports is expected to drop to about $52 billion this year, from $88 billion in 2014. Government revenues will decline by about 40%, and spending will slump. Economic growth is expected to slow to about 4.5% this year, from an average of over 7%...
from The Economist: Special report http://ift.tt/1H1513B
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