Nigeria plans to cut its 2019 budget to lower debt, its budget minister said on Thursday, a day after parliament approved a new $2.8 billion Eurobond issue but warned of a debt overhang.

Next year’s budget was planned to be 5.15 percent lower than this year at 8.65 trillion naira, the minister of Budget and National Planning, Udoma Udo Udoma, told reporters when he presented the 2019-2021 Medium Term Fiscal Framework & Fiscal Strategy Paper, a draft document on which the budget is base.

The fiscal paper needs to be approved by the government and parliament before the budget is finalised.

The Senate on Wednesday approved a $2.786 billion Eurobond issue, meant to part finance the 2018 budget but advised the government to boost revenues and limit borrowings.

Udoma said the government earned 2.48 trillion naira in the first eight months of this year, compared with 2.6 trillion naira last year, helped by higher oil prices.

Oil production, which Nigeria relies on for about two-thirds of government revenues, was at 1.9 million barrels per day in the second quarter, against an estimated 2.3 million barrels per day, budgeted for 2018, Udoma said.

The draft budget ministry document showed that Nigeria could earn 306 billion naira via privatisations in 2018 and another 5 billion naira from the sale of non-oil assets.

However, it said the West African country faced significant medium-term fiscal challenges, especially with respect to revenue generation and that key reforms would be implemented to improve collection and expenditure management.

It did not mention any specific reforms.

The 2019-2021 document expects inflation to fall to single-digit to 9.98 percent by 2019 from 11.28 percent in the second quarter and sees gross domestic product of 3 percent for 2019 from 1.5 percent achieved in the second quarter.

The draft document said the government was making some provision for a possible minimum wage increase. Labour unions have been negotiating with government on a new minimum wage following a currency devaluation and fuel price hike two years ago. (Reuters)