Finance Minister Dr. Ngozi Okonjo-Iweala said the federal government has revised downward the country’s growth forecasts to between 6 and 7 per cent, from previous projection of between 7 and 8 per cent. “We can do 6-7 per cent this year. That would be very good,” she told a news briefing during an African Development Bank annual meeting in the Tanzanian city of Arusha.
During its budget presentation for 2012, the government had forecast 7-8 per cent growth. Nigeria’s economy grew 6.17 per cent in the first quarter of this year, down from 7.68 per cent growth in the previous quarter, figures from the National Bureau of Statistics showed last week. “We have been growing at an average of 7 per cent these past few years but now we have a dip in first quarter growth. This is understandable given the drop in agricultural activity in the north due to disturbances,” Okonjo-Iweala said, referring to the insurgency by Islamist sect Boko Haram in the north.
The central bank has put lower growth down to falling crude oil prices and domestic oil output, which means Nigeria, faces a potentially sustained slowdown. Worries over growth persuaded it not to raise interest rates above 12 per cent this month despite higher inflation. Year-on-year inflation rose to 12.9 per cent in April, from 12.1 in the previous month. “We hope to get inflation down to the low double-digits or high single-digits by the end of the year,” Okonjo-Iweala said.
Though Nigeria’s economy has been one of the fastest growing in the world, poor fiscal management has tended to waste some of these gains and trigger inflation. The finance ministry revealed that Nigeria has already spent half its 2012 budget for a massive fuel consumption subsidy on arrears for last year, raising the prospect it may have to scrap the scheme or issue debt just to sustain it. The government attempted to remove the subsidy in January but popular protest forced its partial reinstatement. Okonjo-Iweala said January had been “a slow month” because of the strikes that shutdown economic activity during protests.