Abuja - The Federal Government has agreed to increase spending by five percent but reduce the fiscal deficit in next year's budget, which will be sent to parliament for approval next month, the finance minister said on Wednesday.
Cabinet agreed total 2013 budget spending of 4.929 trillion naira, up from 4.697 trillion this year, Ngozi Okonjo-Iweala told reporters at the presidential villa.
The fiscal deficit and domestic borrowing would come down to 2.17 percent and 727.19 billion naira next year respectively, from 2.85 percent and 744.44 billion this year, she said.
In previous years, the national assembly and executive arm of government have disagreed over the budget and the figures put forward by cabinet are subject to change. In recent years, parliament has succeeded in boosting total spending.
"The focus of the federal government's proposals is that the budget should make a practical impact on the areas that matter most to the Nigerian people which are: jobs, power supply, roads, rail other infrastructure and agriculture," Ngozi Okonjo-Iweala said.
"The 2013 budget proposal is anchored on the key goal of achieving fiscal consolidation with growth and job creation."
Next year's budget is based on oil production, which makes up 80 percent of government revenue, of 2.5 million barrels per day, up from 2.4 million bpd in the 2012 budget and at the top of analysts' projections, especially given the spike in crude oil theft this year.
Cabinet is proposing a benchmark oil price of $75 a barrel, up from $72 in this year's budget. Anything Nigeria earns from oil exports over that benchmark price is supposed to be saved in its excess crude account, although this has been systematically raided by a succession of administrations when funds run short.
The oil output assumptions and benchmark price means Nigeria is expecting revenue of 3.891 trillion naira next year.
"The rise in spending is not unexpected. But a $75 per barrel benchmark oil price together with a hugely ambitious output assumption is worrying," Razia Khan, Head of Africa Research at Standard Chartered said.
Oil theft has surged in the restive onshore Niger Delta region this year with foreign oil major Shell saying around 150,000 bpd is stolen and much more deferred due to the damage caused to infrastructure by the thieves.
Nigeria's oil exports, which are popular with the U.S., India and Europe, were expected to hit an 11-month low in September.
Okonjo-Iweala said capital expenditure would rise to 31.34 percent in the 2013 budget, up from 28.5 percent this year as she looks to reduce the amount government spends on itself.
One of the major problems with Nigerian spending plans in the past has been they are passed months late and often half the proposed capital projects aren't implemented due to corruption and mismanagement.