* President Jonathan presents budget on Tuesday
* Spending slashed by 10 pct, but lawmakers to inflate it
* Capital spending cut to make the savings
* Bond investors watching budget more closely
LAGOS, Nov 15 (Reuters) - Nigeria's president faces a daunting task when he presents next year's budget on Tuesday, with tighter spending likely to be shot down by lawmakers keen to keep the wheels of patronage turning ahead of elections in 2015.
Economists have praised Finance Minister Ngozi Okonjo-Iweala's efforts to slash spending in the budget framework paper, which allocated outgoings of 4.5 trillion naira ($28.27 billion) for 2014, against 5 trillion in 2013.
But they wonder how she will manage to push it through in the run-up to presidential and parliamentary elections in 2015, as polls invariably trigger fiscal slippage in Africa's top oil producer.
Lawmakers have indicated they want to increase spending in the budget that President Goodluck Jonathan is expected to present on Tuesday.
The president is expected to run for re-election in 2015.
Finance Minister Ngozi, mindful that election cycle spending tends to empty the coffers, leaving the economy vulnerable to oil price or production shocks, and that oil savings are already rapidly running out, has aimed to make the budget as tight as possible.
Foreign bond investors will be watching this budget more closely than previous ones because they have larger positions at stake and looser capital controls introduced since the last vote mean they can get their money out quicker.
"There's more investor involvement in Nigerian markets, so there'll be a lot more scrutiny around the budget numbers," Standard Chartered's chief Africa economist Razia Khan said.
Africa's second-biggest economy is growing as an investment destination, with growth of around 7 percent, improving fiscal and currency stability, and falling inflation. Its debt-to-GDP ratio is still low at around 20 percent, compared with about 50 percent for fellow West African commodities exporter Ghana.
But investors are wary of a long-established tendency to mismanage oil revenues - especially around election time.
"If investors fail to get reassurance on fiscal consolidation, a lot of hot money could leave very quickly."
The budget plan aims to slash spending by 10 percent on last year's. By contrast, before the 2011 election, spending went up by half, Khan said.
KEEPING A LID ON IT
Nigeria's federal budgets are small for an economy of nearly $300 billion, partly because states and local councils get separate oil revenue allocations. They assume a benchmark oil price and production figures.
In the 2014 budget plan document, the benchmark is $74 a barrel. Every dollar a barrel fetched over the benchmark price is put into oil savings, so a lower benchmark oil price in theory means more money stowed away for a rainy day.
But last year lawmakers inflated the benchmark price by $4 a barrel, and the House of Representatives and the Senate this week each proposed amendments to the framework paper that would inflate it to $79 and $76.5 a barrel, respectively.
"The legislature is spoiling for a fight," a senior aide to the national assembly, who declined to be named, told Reuters.
"Ngozi has serious lobbying to do to get this through."
Most of the cuts will hit badly needed capital expenditure for infrastructure projects.
"That's not what an economist wants to see but it's politically realistic," said Renaissance Capital economist Charles Robertson. "Spending is under pressure and you have to make cuts. And the cuts are coming to capital expenditure."
Projected oil production of 2.39 million barrels per day in 2014 also look optimistic, says Khan. Output was around that last year but is currently running at 2.11 million barrels a day, according to the latest official figures, and is falling due to rampant oil theft and resultant outages.
The proposed deficit of 1.9 percent of GDP looks healthy, and similar to this year's level. But federal deficits don't give a complete picture, says Standard Bank's Samir Gadio. They don't account for money spent by states and local councils, or drawn from oil savings.
Nigeria spent around $6 billion from the Excess Crude Account (ECA) this year, depleting it to just over $3 billion.
"Nigeria as a whole is running a consolidated fiscal deficit of at least 2-2.5 percent of GDP, excluding arrears," Gadio said, noting that this was still comparatively low.
"They are trying to demonstrate there won't be fiscal slippage ahead of the elections, but that's a PR exercise," for the markets, he said. "There is still an election to fight." ($1 = 159.1700 naira)
(Additional reporting by Chijioke Ohuocha; Editing by Susan Fenton)