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AFRICAN DEVELOPMENT BANK
DEVELOPMENT CENTRE OF THE ORGANISATION
FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
UNITED NATIONS DEVELOPMENT PROGRAMME
ECONOMIC COMMISSION FOR AFRICA
Fiscal management has aimed at ensuring macroeconomic stability. The ﬁscal policy stance is geared toward
ﬁscal consolidation and inclusive growth, with the ﬁscal deﬁcit set within the threshold of 3.0% of GDP after
2010. The medium-term ﬁscal strategy is to reorient spending from recurrent expenditure to capital
expenditure. The share of recurrent expenditure in the total budget decreased from 74.4% in 2011 to 71.4% in
2012 and 68.7% in 2013, while the share of capital expenditure increased from 25.6% in 2011 to 28.6% in 2012
and 31.3% in 2013. The steady increase in the share of capital expenditure is expected to lead to an
improvement in physical infrastructure and provide a firmer platform for future growth.
As part of the ﬁscal consolidation, on 1 January 2012 the Nigerian government eliminated the subsidy on petrol
because it was unsustainable and those for whom it was meant were not beneﬁting from it. In 2011, 30% of
total government expenditure – or about 4.2% of Nigeria’s GDP – was on petrol subsidies. The total subsidy
payments for 2012 and 2013 are estimated within the range of USD 5-6 billion. The removal of the fuel subsidy
caused retail fuel price to increase from NGN 65 (USD 0.42) to NGN 141 (USD 0.92) per litre, triggering an
eight-day national strike. The strike was called oﬀ after the fuel price was reduced to NGN 97 (USD0.63) per
litre. The cost of the strike was estimated at about 0.5% of GDP. The government redirected the savings from
the partial removal of the fuel subsidy into social safety net programmes and key infrastructure projects through
a Subsidy Reinvestment and Empowerment Program (SURE-P).
The projected ﬁscal deﬁcit for the 2012 budget was 2.85% – a reduction from the 2.96% of GDP in the 2011
budget. This is within the required 3.0% threshold laid out in the Fiscal Responsibility Act (FRA).
The government is investing in key sectors consistent with the objectives of its Transformation Agenda. Shares
to the key sectors of the economy were as follows: security 19.9%, education 8.65%, health 6%, power 3.5%,