Recession likely if gloomy economy persists – Finance minister

…Says collective efforts of executive, NASS will minimise how far Nigeria goes into recession

Tunde Opalana, Abuja

Minister of Finance, Budget and National Planning, Zainab Ahmed, on Monday, raised the alarm that going by the downward trend in global economy of which Nigeria is not isolated, the country might be heading for another economic recession.

Present economic situation in the country is not getting any better with deficit financing of revised N10 .509 trillion 2020 budget rising from N1.847 trillion to N4.563 trillion.

This is coupled with the drastic reduction in revenue proposals of revenue generating agencies and earmarking of about 77 percent of the newly proposed revenues from the various agencies like the Nigerian National Petroleum Corporation (NNPC), Federal Inland Revenue Service (FIRS), Nigerian Customs Service (NCS) etc, for debt serving.

This indications emerged in the minister’s speech during the defence sessions held by the Senate Committee on Finance with heads of the nation’s revenues generating agencies on revised 2020-2022 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).

Ahned, in her response to a question on the likelihood of recession, said: “Very clearly the Gross Domestic Product (GDP) has been reduced because of the economic crisis that we found ourselves in, but Nigeria is not alone in this.

“The global economy is predicted to be also slipping into recession. What we are hoping to do by our own collective efforts – the executive and the National Assembly – is that we minimize how far we go into recession.

“National Bureau of Statistics (NBS) has made an assessment that we will go into recession to the level of 4 percent.

“So some of the work that the executive is doing is preparing a stimulus package as remedy, so that if it happens maybe we are going into 0.5 percent or 1 percent not going much lower.

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“That is our unfortunate reality and the reality of the global economy”.

The slashed projected revenues for the various agencies are the N1.5 trillion earlier proposed for Nigeria Customs Service, reduced to N950 billion, N463 billion earlier projected as stamp duty revenues for FIRS now reduced to N200 billion, N1.222 trillion earlier projected for NNPC’s federally funded projects now reduced to N484 billion.

But the Chairman of the Committee, Solomon Adeola (APC Lagos West), in his closing remarks after the session, said some of the new proposals may not be adopted as requested.

He said: “Having listened with rapt attention to all presentations made by the Minister for Budget and National Planning and the questions asked regarding the MTEF and FSP, I believe that members of the Committee are satisfied with reasons being offered by the minister on why we have to go this direction at this point in time.

“But Honourable Minister, we are still waiting for that Economic Stimulus grand document by the committee headed by the Vice President of the Federal Republic of Nigeria, because what that documents intends to do is to keep the economy going aftermath of COVID-19.

“Secondly, all related documents which we have requested as a committee ranging from the special accounts, to the deficit document as explained by the DG budget office, it is expected that the documents get to us in no distant future.

“Also on the issue of the Stamp Duty, yes the Senate is to investigate the Stamp Duty Account with the Central Bank of Nigeria, that motion has been passed by the Senate for the Committee on Finance to investigate and we will not hesitate to investigate because there is need for us to get to the root of this matter regarding the cashless transaction.

“For the FIRS, yes, there is a proposal that about one hundred and something billion should be removed from your budget of N1.8 trillion under the company income tax, but I am happy to announce to you that we are not going to reduce it and that it is expected that you bring in the money”.