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Nigeria heading for recession – Minister

Minister of Finance, Hajia Zaynab Ahmed
Minister of Finance, Hajia Zaynab Ahmed

As the disruptions of the global economic system by the COVID-19 continues to create anxieties in governments globally, the Federal Government on Thursday revised downward its growth projections for the economy, saying the economy could contract by -8.94% this fiscal year in the absence of a fiscal stimulus.

The Minister of Finance, Budget and National Planning, Zainab Ahmed, gave the latest forecast during the National Economic Council held at the Presidential Villa, Abuja.

Ahmed told the State Governors who are the NEC members at the meeting presided over by the Vice President, Prof. Yemi Osinbajo, that in a best-case, without any fiscal measures, that the contraction could reach -4.4%.

READ: As COVID-19 threatens over N9trn budgets: States stop projects, cut overheads

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She expatiated: “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.

READ: FG fears the worst, says economy to shrink by -8.9% in 2020

“40% of the population in Nigeria, today, are 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 -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%”, Ahmed projected.

With crude oil prices plunging into lowest level at the international market over the past few months due to the coronavirus pandemic, the Nigerian government has been troubled as crude exports account for over 80 percent of the nation’s foreign exchange earnings on yearly basis.

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