Nigeria‘s budget deficit is set to fall to 1.85 percent of gross domestic product in 2013, the director general of the budget office said on Thursday.

Last year’s budget predicted a 2012 deficit of 2.97 percent of GDP.

Nigerian President Goodluck Jonathan approved a 4.99 trillion naira budget last month for 2013, after it was passed by parliament, ending two months of disputes over the spending plans.

“There’s has been a trending downwards of the fiscal deficit,” Budget Office Director General Bright Okogwu told journalists in the capital Abuja.

“We have a deficit of about 1.85 percent of GDP. I think this is very good going.”

Nigeria’s revenues from oil production usually exceed spending and the surplus is deposited into the Excess Crude Account (ECA), which means the deficit is to some extent artificial – it can usually be financed from the country’s own savings.

But the balance in the ECA has been steadily increasing over the past year which, combined with a lower nominal deficit, suggests Nigeria is saving more of its oil windfall – a key objective of finance minister Ngozi Okonjo-Iweala.

That objective put her in conflict with the national assembly, whose members wanted to free up more spending for projects and their constituencies.

Jonathan presented the budget to the national assembly in October but lawmakers increased spending and reduced the amount of oil revenues Africa’s largest producer would save by the time they passed the budget in December, triggering a stand off.

In the end, the administration backed down: spending rose to 4.99 trillion naira from the 4.92 trillion proposed by Jonathan’s team.

Source: Reuters