The Federal Government has cut capital expenditure by more than half to less than 10 percent of the 2015 budget spending due to the effect of falling global oil prices have had on government revenues. The cut will make infrastructure development suffer this year.
The document, seen by Reuters, puts capital expenditure at N387 billion ($2 billion), or 8.9 percent of total spending of N4.357 trillion. This is a significant drop from the 2014 spending plans when capital expenditure (capex), accounted for 23.7 percent of projected government outlays.
Director General, Budget Office, Bright Okogwu, said the reductions were the direct result of the halving in the last six months of the price of crude, which normally accounts for 80 percent of government revenue.
“The capex was severely affected by the huge reduction in revenue,” Okogu told Reuters. He said it was easier to cut infrastructure projects than cut wages…, and “you cannot reduce staff numbers overnight.”
With Boko Haram insurgency still dealing the country a big blow, military spending will rise in 2015 regardless of the cuts.
The National Assembly is expected to start discussing the budget later this month and it is likely to be passed in March, regardless of who wins the presidential election on February 14.