Conflicting oil, inflation and exchange-rate forecasts blamed for budget gaps

Nigeria’s Federal Government has blamed part of its budget underperformance on different agencies using different economic forecasts. The conflicting assumptions covered crude oil prices and production, exchange rates, inflation and non-oil revenues.

The Economic Management Team approved an inter-agency committee to harmonise the figures used in budgeting and economic planning. The decision followed a joint budget retreat and technical validation workshop, which identified inconsistent assumptions and occasional differences between projections by government authorities.

The committee will also address inconsistencies in how major economic indicators are reported and communicated to investors, development partners and the public. The government said a common set of assumptions should make budget expectations more closely match actual economic outcomes.

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The decision follows a joint budget retreat and a technical validation workshop that traced budget under-performance in part to inconsistent assumptions used by different agencies, and to occasional divergence between key projections by various authorities responsible for economic policies.

The Minister of Finance and Coordinating Minister of the Economy said, “Today’s decisions tighten the link between the numbers we plan with and the actual outturns. A single, harmonised set of assumptions across the fiscal and monetary authorities means fewer surprises in the budget and more credible planning for investors and all Nigerians.”

The Economic Management Team also revised its terms of reference. Its expanded responsibilities include regular reviews of macroeconomic performance, stronger fiscal and monetary coordination, monitoring of the Renewed Hope Agenda and periodic assessments of the government’s financing requirements. Under the new arrangement, the team will meet monthly, with at least two strategic sectors scheduled for review.

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Today’s decisions tighten the link between the numbers we plan with and the actual outturns. A single, harmonised set of assumptions across the fiscal and monetary authorities means fewer surprises in the budget and more credible planning for investors and all Nigerians.