UPDATE 1-Nigeria's cabinet proposes 3% economic growth target for 2021 budget

(Adds details, context)

LAGOS, Sept 30 (Reuters) - Nigeria’s cabinet proposed on Wednesday a 3% economic growth target and an 11.95% inflation target for its 2021 budget, a presidency aide said.

The cabinet also plans to target a $40 per barrel oil benchmark and 1.86 million barrels per day of crude production in the budget, the aide said on his official Twitter account.

Badly hit by the coronavirus pandemic, Nigeria’s economy contracted 6.1% in the second quarter of 2020 and now faces possible recession in the third, with the government expecting the economy to shrink by as much as 8.9% this year.

Low oil prices have also taken their toll on the African continent’s top producer, which relies on crude sales for 90% of foreign exchange earnings.

The Nigerian cabinet signed off on planned expenditure in 2021 of 13.08 trillion naira ($34.37 billion) with a deficit of 4.48 trillion naira, and set its expected exchange rate for the naira currency at 379 to the U.S. dollar, according to the aide.

The budget requires legislative and presidential approval before coming into effect, a process that can take months. ($1 = 380.6000 naira) (Reporting by Alexis Akwagyiram in Lagos and Paul Carsten in Abuja Editing by Gareth Jones/Mark Heinrich)