The Federal Government is proposing a review of the 2020 budget using a US$30 per barrel price benchmark as against USD$57 initially passed in December by the National Assembly.
The Minister of Finance, Zainab Ahmed, speaking at a meeting with National Assembly leaders, said this is to prepare for ‘worst case’ scenario, as well as insulate the Nigeria economy against any form of unexpected crisis.
Ahmed said the Nigerian economy, was already “fragile and vulnerable,” even before COVID-19, which saw the international oil prices plunge to as low as $22 (USD) per barrel.
She said the Crisis Management Committee constituted by President Muhammadu Buhari in response to the COVID-19 and oil price decline is concerned that the crisis may be magnified if a severe outbreak of the pandemic occurs in Nigeria.
She also told the leadership of the National Assembly that budgeted revenues for the Nigeria Customs Service have been reduced from N1.5 trillion to N943 billion “due to anticipated reduction in trade volumes; and privatization proceeds to be cut by 50 percent, based on the adverse economic outlook on sales of the Independent Power Projects (IPPs) and other assets.”
Similarly, Ahmed disclosed that the Federal Government has undertaken cuts to Revenue-related expenditures for the Nigerian National Petroleum Corporation (NNPC) for several projects included in the 2020 Appropriation Act passed by the National Assembly in December, 2019.
“The Federal Government is working on Fiscal Stimulus Measures to provide fiscal relief for Taxpayers and key economic sectors; incentivize employers to retain and recruit staff during the economic downturn; stimulate investment in critical infrastructure; review non-essential tax waivers to optimize revenues; and compliment monetary and trade interventions to respond to the crisis,” the Finance Minister disclosed.
She added that the Federal Government had made provision for health sector interventions by introducing import duty waivers for essential input for pharmaceutical firms; tax waivers on new equipment; and deferment of tax to increase production.
Ahmed further disclosed that the Federal Government would be releasing the total sum of N6.5 billion in two tranches (N1.5 billion and N5 billion) to the National Centre for Disease Control (NCDC) as intervention to assist in the fight against the spread of the COVID-19 disease in Nigeria.
Also, she stated that the Lagos State Government would receive financial support from the Federal Government to the tune of N10 billion to combat Coronavirus spread in the state.
In addition, she informed the lawmakers that Nigeria had received a grant of US$18.2 million from Japan for strengthening seven National Centre for Disease Control (NCDC) centres across the country.
The Finance Minister, said that the sum of one billion naira would be released by government to Pharmaceutical firms in the country.
In his presentation, the Governor of the Central Bank, Godwin Emefiele said, “while we would expect to see a decline in our expected growth projection for 2020 relative to 2019, the exact impact will be dependent on how well the corona virus is contained over the next few month, and how long low oil prices persist.”
