The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, yesterday said Nigeria would have to take tough measures to stop the country from slipping into an economic recession as a result of the harmful impact of COVID-19 on the economy.
Ahmed spoke during an interview on Arise TV, the broadcast arm of THISDAY Newspapers, and said with the massive plunge in the price of oil, arising from multiple shutdowns occasioned by the advent of COVID-19, which had distorted the basic assumptions of the 2020 Budget, the country would have to take bold steps to avert a recession.
She, however, allayed fears over the downgrading of Nigeria by major international credit rating agencies, explaining that the phenomenon was not unique to Nigeria, and added that others countries would suffer the same fate as a result of the adverse impact of the pandemic on the global economy.
“So, we need to do things that are very radical, and very bold and very different and maybe, even unusual so that we don’t slip into a recession,” she said.
Ahmed expressed worry at the state of the economy, which had been worsened by freefall in the price of oil, Nigeria’s major foreign revenue earner.
“It worries me that our economy is in crisis,” she told Arise TV, adding: “It worries me that when we did an assessment, our own assessment is that we could go into a recession in 2020 and the numbers we have from the NBS (National Bureau of Statistics) is a -3-4 and that is very disturbing. The multilateral institutions placed us on a much higher number.”
The minister emphasised that the collapsing demand for crude oil was giving Nigeria a great deal of concern because of the projected crude oil price of $57 per barrel in the 2020 Budget had become unrealistic.
She explained: “Now, we have to work with an average of $30 per barrel. We also have to adjust the volume from 2.1 million barrels per day to 1.7 million barrels per day because the market is low.
“In the last couple of weeks, we have cargoes of crude that are not moving because Europe is literally shut down and that’s where we have our biggest market and also India is shut down. So, the demand is very low. We have seen countries planning to shut down production or part of their production. We hope it doesn’t get to that.
“We are happy that the price has adjusted at least within the $30 range now. Last week, there were some days that it went to as low as $17.5 per barrel. What we are doing now is we are reassessing our plans. We are deferring anything that is not vital.”
She said, however, that the federal government was studying the situation and making appropriate decisions on how to safeguard the economy from slipping into a recession, pointing out that one of the measures was the stimulus package and the moved to pick up $7billion from multilateral agencies, including the International Monetary Fund (IMF), the World Bank, African Development Bank (AfDB) and the Nigerian Sovereign Investment Authority (NSIA).