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Thursday, 21 November, 2002, 13:26 GMT
Nigeria banks on $21 oil price
Nigerian President Olusegun Obasanjo
Can President Obasanjo reign in spending?
Nigeria's president Olusegun Obasanjo has unveiled Nigeria's 2003 draft budget, basing revenues on an average oil price of $21 a barrel.

The budget has been slimmed down by about 30% to 765bn naira ($6bn).

Mr Obasanjo has already said that parliament cannot afford the previous budget and is determined to prove to international creditors that the country will spend within its means.

Administrative costs will be reigned in by creating a smaller but more skilled and productive civil service, he said.

Africa's second largest economy is targeting real economic growth of 5% in 2003, and inflation of 9%.

Oil uncertainties

Oil accounts for more than half of the government's revenues, and is estimated to bring in 1.120 trillion naira next year.

But the volatile oil price makes it very difficult to predict the budget.

Oil is currently trading at about $25 a barrel, but next year's price is particularly uncertain because of the threat of a US-led war against Iraq.

In August, Nigeria said it could no longer afford to service part of its $33bn foreign debts because of plunging oil revenues and the failure of some of its privatisation plans.

Nigeria is a member of the oil cartel Opec, which has forced it to scale back its oil exports this year.

Mr Obasanjo predicted an unchanged Opec output quota for 2003 despite widespread rumours that Nigeria wants to increase exports and solve its budget balancing difficulties.

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