Tuesday, September 22, 2020
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Nigeria’s Economy Projected to Contract by 3.4%

By Tony Obiechina, Abuja 

Following the dwindling oil revenues and novel coronavirus pandemic, Nigerian Government officials on have projected that the economy will contract by 3.

4 percent. 

This is even as they also noted that the situation has forced the country to cut budget plans for a second time to assume a lower petroleum price of $20 per barrel.

Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed said in March that this year’s record 10.59 trillion naira ($29.42 billion) budget would be cut by about 15%.

At the time, she said the initial assumed oil price of $57 per barrel would be reduced to a worst case scenario of $30 per barrel.

But speaking at a web conference on Tuesday, the Minister  said that the benchmark would again have to be revised downward.

“We are in the process of an amendment that is bringing down the revenue indicator to $20 per barrel”.

Ahmed also said Nigerian oil and gas projects will be “delivered much later than originally planned” due to upstream budget cuts.

It also plans to cut oil production to 1.7 million barrels per day (mbpd), from the 2.1 mbpd initially proposed in the budget, under an agreement brokered by the Organization of the Petroleum Exporting Countries (OPEC).

Also speaking, Director General of Budget Office, Mr. Ben Akabueze said that oil revenues were expected to fall by more than 80%. 

According to him, the government had revised its projections and expected the economy to contract by 3.4% this year compared with its previous expectation that it would grow by 2.9%.

The implication is that the economy may likely dip into recession unless urgent critical actions are taken to boost economic activities – production and purchasing power. 

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