With the deficit financing of the revised N10.509 trillion 2020 budget rising from N1.847 trillion to N4.563 trillion, the economy might be heading for another recession, the Minister of Finance, Budget and National Planning, Zainab Ahmed, has warned.
She expressed the fear yesterday in Abuja during a session with the Senate Committee on Finance where heads of revenue-generating agencies made presentations on the revised 2020-2022 Medium Term Expenditure Framework (MTEF) and the Fiscal Strategy Paper (FSP).
The minister noted that projected revenues from the agencies had been drastically slashed.
According to her, 77 per cent of the new financial expectations from sources like the Nigerian National Petroleum Corporation (NNPC), the Federal Inland Revenue Service (FIRS) and the Nigerian Customs Service (NCS) would go for debt servicing.
Fielding question on the possibility of a fresh downturn, Ahmed asserted: “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 also be slipping into recession. What we are hoping to do by our own collective efforts – the executive and the National Assembly – is to minimise the impact.”
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She said further: “The National Bureau of Statistics (NBS) has made an assessment that we will go into recession to the level of four per cent.
“So some of the work that the executive is doing is to prepare a stimulus package as a remedy.
“That is the unfortunate reality and the reality of the global economy.”
Recall that the projected revenue for the Nigeria Customs Service was pruned from N1.5 trillion to N950 billion, FIRS’ stamp duty income of N463 billion went down to N200 billion, while the N1.222 trillion earmarked for NNPC’s federally funded projects was cut to N484 billion.
In his closing remarks, the panel chairman, Senator Solomon Adeola (APC: Lagos West), said some of the proposals might be tinkered with.
He submitted: “Having listened with rapt attention to all presentations made by the Minister of Finance, Budget and National Planning and the questions asked regarding the MTEF and FSP, I believe that members of the committee are satisfied with the reasons 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 document by the committee headed by the Vice President because what that document intends to do, is to keep the economy going in the aftermath of the COVID-19 pandemic”, he said.
