Federal Government plans to pump in N100Bn As Recession sets in

The Federal Government plans to spend N100 billion ($312.50 mil­lion) on capital projects in the coming days as part of the 2016 budget, Vice President Yemi Osinbajo said on Thursday.

This is part of measures by the coun­try to inject life into an economy facing recession.

The economy is in the middle of its worst crisis in decades, as a slump in oil reve­nues hammers public finances and the nai­ra. Gross domestic product shrank 0.36 percent in the first quarter and the central bank governor has said recession is likely.

Osinbajo said government capital spending so far has reached N332 billion.

Another 100 billion naira will be re­leased in the next few days to fund pow­er, housing, transport, agricultural and de­fence projects, Osinbajo said.

“We have pledged to keep capital spend­ing at a minimum of 30 percent (of the 6.06 trillion Naira budget),” he told a business forum in Lagos.

But Osinbajo also said many of Nigeria’s 36 federal states were still struggling to pay the salaries of civil servants, despite assis­tance from the federal government.

He said a float of the Naira and more flexible foreign currency regime in June had eased pressure on foreign reserves, without giving details. The naira has lost some 40 percent since then.

“I believe … there will be an increase in supply of foreign exchange,” he said.

He also said Nigeria had saved 1.4 trillion naira by ending fuel subsidies and increas­ing fuel prices in May. “Fuel consumption is down 800 trucks per day from 1,600 trucks per day before the price increase,” he said.

Publication of GDP data for the second quarter will be delayed until Aug 31, the head of the statistics office said on twitter.

With oil prices dropping, the govern­ment has struggled to fund the budget. It is seeking advisers and book runners to manage a planned $1 billion eurobond it intends to offer this year.