* Jonathan proposes $31.3 bln budget, 5 pct spending rise
* Lawmakers want to inflate oil benchmark to $80/ barrel
* Deficit falls 2.17 pct in proposal, assumes 6.5 pct growth
(Adds finance minister reaction)
By Camillus Eboh
ABUJA, Oct 10 (Reuters) - Nigeria's President GoodluckJonathan on Wednesday presented a 4.92 trillion Nigerian naira($31.3 billion) budget to parliament for 2013, but lawmakersdisputed it, calling for a formula that would put less oil cashin the savings pot.
Jonathan's proposal increased spending by 5 percent fromthis year's 4.697 trillion naira, but shrunk the deficit and cutthe share taken by recurrent expenditure.
The plan saw the fiscal deficit coming down to 2.17 percentof GDP, from 2.85 percent previously, assuming the economy growsat 6.5 percent, he said -- a lower projection than this year'sexpected 6.85 percent growth.
Africa's second biggest economy and top oil producer isgrowing as an investment destination, offering enviably higheconomic growth and a huge consumer market from a 160 millionpopulation. It's sovereign debt has soared since JP Morgan addedit to its emerging market bond index this month.
But investors remain wary of the government's tendency tosquander its oil windfall on reckless spending and corruption.
The budget assumed 2.53 million barrels per day (bpd) oiloutput, up slightly from 2.48 million bpd this year, and aglobal oil price of $75 a barrel, up from $72 a barrel in 2012.
Signalling an impending showdown over the bill, parliament'sspeaker Aminu Tambuwal said the house had proposed to inflatecabinet's oil price assumption in the 2013 budget to $80 barrel,triggering cheers from fellow legislators.
Money earned from oil over the benchmark price is depositedinto a savings mechanism called the Excess Crude Account (ECA).Any increase in the benchmark price will therefore reducesavings and make Nigeria less resistant to oil price shocks.
Finance Minister Ngozi Okonjo-Iweala is on an austeritydrive and wants Nigeria to be more fiscally prudent.
But lawmakers, who have been grumbling about delays in theirallowances in the execution of the 2012 budget, were in no moodto accept such a slight increase in the benchmark.
In past such disagreements parliament usually wins. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For an analysts' views on the Nigeria budget ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ "PRUDENT"
Okonjo-Iweala rejected parliament's proposal to raise thebenchmark, telling reporters she knew of no major oil exporterwhose budget used a guide price as high as $80 a barrel.
"The benchmark that we used is based on an econometric model... You cannot just pick the number from anywhere," she said.The $75 benchmark would "safeguard stability," she added.
Jonathan urged lawmakers to heed uncertainty over the priceof oil, which makes up 80 percent of revenues.
"This threat of oil price volatility remains constant andforces us to rely on a prudent methodology when calculating thebenchmark price," he said. "These are uncertain times in theworld economy. We've taken necessary steps to mitigate possiblenegative effects ... of a global recession."
Even before he delivered it, signs of rebellion were clear.Opening the session, Senate President David Mark told Jonathanthat his numbers were "mere estimates, not immutable figures".
"We do not think that the constitution intended to turn theNational Assembly into a mere mechanical rubber-stamp that mustrobotically pass budget estimates as presented," he said.
The budget proposed cutting recurrent expenditure -- thecost of running the government -- to 68.7 percent of the totalbudget, from its current 71.47 percent. Economists have longurged Nigeria to slash what they say are extortionate costs.
The rest is on capital expenditure, most infrastructure.
Jonathan added that the government would issue a $1 billionEurobond next year to finance a gas pipeline for domestic use.
Economists such as central bank governor Lamido Sanusi haveurged parliament not to inflate the benchmark oil price, fearinga credit crunch if global crude prices suddenly fall.
"Given global risks ... the priority for Nigeria has got tobe increasing its rate of saving," Razia Khan, head of Africaresearch at Standard Chartered said, reacting the budget.
"Were oil prices to fall, Nigeria would be left veryvulnerable ... There is a need for much more fiscal conservatismand the signals from the house are a considerable concern."
Some analysts also said cabinet's production assumptionsmight be too optimistic. Up to a fifth of Nigeria's oil is lostto theft, according to official figures.
($1 = 157.2 naira)
(Reporting by Camillus Eboh; Writing by Tim Cocks; editing byRon Askew)
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Keywords: NIGERIA BUDGET/