It is unlikely that Nigeria will exit the Third Quarter of the year without the economy going into a recession, the Federal Government has warned.
If it happens, it will be the second in four years after the country came out of the last one in 2016.
The government said the looming recession was a fallout of the ravaging COVID-19, which had altered all economic projections for 2020.
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For instance, it said the crash in the prices of crude oil, the mainstay of Nigeria’s monolithic economy, was one of the major fallouts.
The Minister of State for Finance, Budget and National Planning, Clement Agba, sounded the alarm in Abuja when he appeared before the House of Representatives Joint Committee on Finance/Appropriation/National Planning and Economic Development/ Aids, Loans and Debt Management.
The committee is working on the 2021-2023 Medium Term Expenditure Framework and Fiscal Strategy Paper, a precursor to the 2021 budget.
Agba represented the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, at the session.
Making a submission to the committee, he said, “The impact of these developments is about 65 per cent decline in projected net 2020 government revenues from the oil and gas sector, with adverse consequences for foreign exchange inflows into the economy.
“Nigeria is exposed to spikes in risk aversion in the global capital markets, which will put further pressure on the foreign exchange market as foreign portfolio investors exit the Nigerian market.
“Nigeria’s Q2 GDP growth is in all likelihood negative, and unless we achieve a very strong Q3 2020 economic performance, the Nigerian economy is likely to lapse into a second recession in four years, with significant adverse consequences.
“In response to the developments affecting the supply of foreign exchange to the economy, the Central Bank of Nigeria adjusted the official exchange rate to N360/USD1, and more recently to N379/USD.
“The disruptions in global trade and logistics would negatively affect Customs duty collections in 2020.
“The COVID-19 containment measures, though necessary, have inhibited domestic economic activities, with consequential negative impact on taxation and other government revenues.
“Consequently, the projections for Customs duty, stamp duty, Value Added Tax, and Company Income Tax revenues were recently reviewed downwards in the revised 2020 budget.
“Customs revenue has generally performed close to target over the last few years, exceeding target in 2019.”
Agba merely re-echoed what President Muhammadu Buhari himself had been saying since the outset of the pandemic and the commitment of government to steer the country out of economic troubles.
The government in the last two months unveiled the National Economic Sustainability Plan, hoping to use it to reflate the economy and keep it afloat by injecting N2.3trillion into the system.
Vice-President Yemi Osinbajo chairs the economic sustainability committee, which also has the participation of state governors in a bid to drive the implementation across the Federation.
However, at the session in Abuja, lawmakers led by the Chairman, House Committee on Finance, Mr James Faleke, said they would work on all possible legislative options to see Nigeria through COVID -19.