Faced with the doubled-edged sword of the coronavirus pandemic and dwindling oil prices, the federal government has said that under a worst case scenario, Nigeria’s economy may be on path to contraction by as much as 8.94 percent this year.
The Minister of Finance, Budget, and National Planning, Mrs Zainab Ahmed, made this projection after the conclusion of the National Economic Summit (NES) meeting in Abuja on Thursday.
“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 N940.91 billion.
“This represented a shortfall of N125. 52 billion or 31 percent of the prorated amount that is supposed to have been realized by the end of that first quarter,” she said.
The Minister said further that the economic contraction will multiply the misery of the 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 percent in 2020.
“But in the best case, which is the case we are working on, it could be a contraction of 4.4 percent, 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 percent,” she said.
Nigeria has had to review its 2020 budget downward twice within two months because of decline in the prices of crude oil, its main source of foreign earnings.
In the 2020 budget, government had first fixed $57 per barrel as oil benchmark, but in March, this was cut down to $30 per barrel when oil was trading in that region. This month, the benchmark was further slashed to $25 per barrel after prices slumped to that territory.
