The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, has presented to the National Economic Council (NEC) the state of Nigeria’s three Special Accounts just as the Excess Crude Account balance as of May 21, 2020 stands at US$72.04 million.
The Minister who spoke to the State House Correspondents after the NEC meeting stated as follows:
“Today at Council, the Ministry of Finance, Budget and National Planning reported to Council the funds we have in three special accounts. So, in the Excess Crude Account, we reported the balance at of 21st of May, 2020, the balance of US$72.04million.
“We also reported to Council that in the Stabilization Account we have as today a balance of N39.337billion.
In the Natural Resource Development Fund Account, we have a balance as at today, N125.19billion.
“Also today at the NEC, we made a presentation to the Council on the structures that the FG is looking at and putting in place, or has already put in place to tackle the challenges of COVID-19 in our country. It is not news any more that these are very difficult and challenging times. We are facing a very significant economic downturn; a time that we have not seen in the history of our country.
The global economy is also facing the sharpest reversals since the great depression and this has both health as well as economic consequences.
On the health, there is a rising rate of infections as reported by the NCDC; we have today over 6,000 cases and this is projected to rise to almost 300,000 by the end of August. Resources required to combat COVID-19 such as ICU beds, isolation centres, ventilators, reagents, test kits, masks, gloves are also very expensive.
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 N940.91billion. This represented a shortfall of N125. 52billion or 31% of the prorated amount that is supposed to have been realized by the end of that first quarter.
Forty percent of the population in Nigeria, today, are classified as 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% in 2020. But in the best case, which is the case we are working on, it could be a contraction of –4.4%, 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% .
As a result of that the president set up the Presidential Economic Sustainability Committee in addition to the COVID-19 Response Committee that has been set up, the Presidential Task Force that is chaired by the SGF as well as the Crisis Management Committee that I chair.
The FG is committed to supporting the financial viability of states, including the suspension of payments in respect of commitments, debts that have been secured with ISPOs by the states at the federal levels. So, we have already implemented suspension of deductions of a number of loans that have been taken by the states from April and also in May.
The Economic Sustainability Committee is responsible for providing overall strategic vision, policy direction and general oversight of the implementation amongst others.
We also had discussions with the World Bank. The World Bank Country Director was invited into the meeting and he spoke to the meeting in respect of their assessment of the impact of COVID-19 on the economy and also their review of the measures that government has taken. As you know, some of these measures include the N500billion that the president has approved to support healthcare facilities and provide relief to tax payers as well as incentives that would be provided to employers to retain and recruit staff during the lockdown period.
This package also includes the increase in the social register by one million households to 3.5million for cash transfer programmes and palliatives and other social safety net programmes.
The World Bank maintains that the impact of the COVID-19 on Nigeria will lead to severe amplified human and economic cost, which will move the country into a recession. The World Bank planned a proposed package for immediate fiscal relief for the FG. This will also involve policy-based policy budget support for the FG, focusing on measures to maintain macro financial stability and create fiscal space for proposed stimulus.
The World Bank package has also got a proposal of $1.5billion for the states and this package will be dedicated to the states. And it will be a programme for results which the states are already used to implementing.
So, the immediate fiscal relief for the states, as stated in the presentation, will include the acceleration of an existing programme to enable disbursement by end of September. So, the proposed $1.5billion plan will by end of September it would have been disbursed to the states. We are looking at an average of between N150billion to N200billion based on the plan to the 36 states. These are states that have already made some particular commitments and achievements so that they will be able to get immediate disbursements of parts of these funds.