By Mathew Dadiya, Abuja
Nigeria has started feeling the impact of the COVID-19 on the global oil price as the country recorded a princely N125.52 billion drop in oil revenue in the first quarter of 2020.
The shorfall represented 31% of the prorated amount that is supposed to have been realized by the end of that first quarter.
Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed disclosed this on Thursday while briefing State House Correspondents after the National Economic Council (NEC) meeting at Presidential Villa, Abuja.
The Minister said that the net oil and gas revenue and influx to the federation account in the first quarter of 2020 amounted to N940.91billion.
Mrs Ahmed regretted that the COVID-19 has resulted in the collapse in oil prices saying that it will impact negatively on the nation’s economy and the impact has already started showing on the federation’s revenues and on the foreign exchange earnings.
According to her, 40% of the population in Nigeria, today, are classified as poor – the crisis will only multiply this misery.
Worried by this indication, the Minister pessimitically said that the could could dip into a recession this year due to the ravaging effect of the Covid-19 on the global economy.
The Minister said: ”The economic growth in Nigeria, that is the GDP, could in the worst case scenario, contract by as much as –8.94% in 2020. But in the best case, which is the case we are working on, it could be a contraction of –4.4%, if there is no fiscal stimulus.
”But with the fiscal stimulus plan that we are working on, this contraction can be mitigated and we might end up with a negative –0.59% .
”The National Bureau of Statistics (NBS) has made an assessment, so it is the NBA assessment that Nigeria will go into a recession measuring at an average of -4.4%. But with the work that the Economic Sustainability Committee is doing bringing stimulus packages, we believe that we can reduce the impact of that recession. And if we applied all that have been proposed and we are able to implement it we may end up with a recession that is -0.4 per cent. In any case, we will go into recession but what we are trying to do is to make sure that it is shallow so that we will quickly come out of it come 2021.
”As a result of that the President set up the Presidential Economic Sustainability Committee in addition to the COVID-19 Response Committee that has been set up, the Presidential Task Force that is chaired by the SGF as well as the Crisis Management Committee that I chair. ”
The minister explained that the FG is committed to supporting the financial viability of states, including the suspension of payments in respect of commitments, debts that have been secured with ISPOs by the states at the federal levels.
”So, we have already implemented suspension of deductions of a number of loans that have been taken by the states from April and also in May, ” she said.
“The Economic Sustainability Committee is responsible for providing overall strategic vision, policy direction and general oversight of the implementation amongst others”, the minister said.
”We also had discussions with the World Bank. The World Bank Country Director was invited into the meeting and he spoke to the meeting in respect of their assessment of the impact of COVID-19 on the economy and also their review of the measures that government has taken.
”As you know, some of these measures include the N500billion that the president has approved to support healthcare facilities and provide relief to tax payers as well as incentives that would be provided to employers to retain and recruit staff during the lockdown period.
”This package also includes the increase in the social register by one million households to 3.5million for cash transfer programmes and palliatives and other social safety net programmes.
”The World Bank maintains that the impact of the COVID-19 on Nigeria will lead to severe amplified human and economic cost, which will move the country into a recession. The World Bank planned a proposed package for immediate fiscal relief for the FG. This will also involve policy-based policy budget support for the FG, focusing on measures to maintain macro financial stability and create fiscal space for proposed stimulus.
”The World Bank package has also got a proposal of $1.5billion for the states and this package will be dedicated to the states. And it will be a programme for results which the states are already used to implementing, ”she said.
Mrs Ahmed also disclosed that the immediate fiscal relief for the states, will include the acceleration of an existing programme to enable disbursement by end of September.
She added that the proposed $1.5billion plan will by end of September, would have been disbursed to the states.
”We are looking at an average of between N150billion to N200billion based on the plan to the 36 states. These are states that have already made some particular commitments and achievements so that they will be able to get immediate disbursements of parts of these funds., ” she explained.