What FG Must Do For Nigeria’s Economy To Avoid Another Recession

Amid Nigeria’s weak foreign exchange reserves and revenue setbacks, the Minister of Finance Budget and National Planning Zainab Ahmed has said that Nigeria can withstand another global recession in 2023.

Ahmed said during an interview with Arise Tv at the World Economic Forum in Davos that if Africa’s biggest oil producer slips into recession, the foreign reserves is enough to trade obligations.

As of 2008, the country’s foreign exchange reserves were over $60bn giving the country a hedge to withstand the shock of the global financial crisis.

Findings by THE WHISTLER revealed that reserves with the Central Bank of Nigeria have dipped to $37.21bn as of January 16, 2023.

The International Monetary Fund is projecting that a third of the world will be in another recession in 2023.

But Ahmed believes the country would withstand the shock despite dwindling reserves.

She said, “It is true we had higher reserves during the first global recession, our reserves are now down but still at a healthy level. We will be able to meet at least six months of imports on another expense into the country. It means we can withstand another global shock if we are going to carry a coordinated response between the monetary, fiscal as well as trade authorities.

“We have learned a lot from the experience that we went through during Covid-19 and it showed that when we plan as one, we can actually withstand the shock.

“When Nigerian economy did go into recession during the Covid but it was a short-lived one because of that coordinated response which had not just government, but also the private sector contributing to the effort.

“So, with the right policies, we can whether another global recession.”

Muda Yusuf, the Chief Executive Officer of the Centre for the Promotion of Private Enterprises told THE WHISTLER that Nigeria may escape recession if its growth trajectory is sustained.

Yusuf said, “I agree conditionally if we undertake the right kind of reforms which I expect this year when we have a change of administration. The economy should be in a much better shape than what it is now because right now some of the policy issues are impeding investment and economic growth is about investments.

“If you are able to remove some of these policy impediments especially the foreign exchange policy issues, the energy policies, oil and gas, electricity, and so on. If you are able to deal with those key areas which is an addition to insecurity I am sure will not sleep into recession.”

“Now our oil output is improving. We are now number one in Africa. If the oil price remains at the level at which it is we are likely to benefit a lot from that. Even as bad as things were last year, in Q3 we still posted GDP growth. Some other economies were contracting.”

But he argued that Nigeria’s reserve remains weak and may disrupt activities if the country falls into recession in the worst case scenario.

“We are very weak on reserves but a recession is about the wider economic activities. Reserves affect the exchange rate, trade, and other things,” he added.