Zainab Ahmed, Minister of Finance, Budget and National Planning, has said the country’s economy is heading towards a recession.
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Ahmed stated this when she briefed journalists after the National Economic Council (NEC) meeting in Abuja on Thursday.
The minister explained that the novel coronavirus (COVID-19) pandemic has had a negative impact on the economy with the fall in oil price, which, in turn, has begun to affect the nation’s revenue.
She explained that the economic contraction will multiply the misery of the poor.
She, however, said the scale of the recession can be lessened if the economic stimulus plan put forward by the Federal Government are implemented.
Ahmed said: “On the economy, COVID-19 has resulted in the collapse in oil prices. This will impact negatively, and the impact has already started showing on the federation’s revenues and on the foreign exchange earnings.
“Net oil and gas revenue and influx to the federation account in the first quarter of 2020 amounted to N940.91billion. This represented a shortfall of N125. 52billion or 31% of the prorated amount that is supposed to have been realized by the end of that first quarter. 40 per cent of the population in Nigeria, today, is classified as poor; the crisis will only multiply this misery.
“The economic growth in Nigeria, that is the GDP, could in the worst-case scenario, contract by as much as minus -8.94 per cent in 2020.
“In the best case, which is the case we are working on, it could be a contraction of minus -4.4 per cent, 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 per cent.”
The Finance Minister also disclosed that the World Bank has a proposal of $1.5 billion to states as part of the economic stimulus to cushion the impact of the pandemic.
She said: “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 Federal Government, 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 $1.5 billion 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 stated that each state would get between N150 billion to N200 billion.