NIGERIA’S economy which has been projected to go into recession this quarter will return to recovery next year, the President said on Thursday.
President Muhammadu Buhari raised the hope when he presented the 2021 budget estimates for Federal lawmakers consideration.
He tagged the N13.08 trillion estimates as Budget of Economic Recovery and Resilience.
Buhari said: “The Nigerian economy is currently facing serious challenges, with the macroeconomic environment being significantly disrupted by the Coronavirus Pandemic.
“Real Gross Domestic Product (‘GDP’) growth declined by 6.1 per cent in the second quarter of 2020.
“This ended the three-year trend of positive, but modest, real GDP growth recorded since the second quarter of 2017.
“I am glad to note that through our collective efforts, our economy performed relatively better than that of many other developed and emerging economies.”
According to the President, the economy may slip because the “GDP growth is projected to be negative in the third quarter of this year. As such, our economy may relapse into the second recession in four years, with significant adverse consequences”.
He added: “We are working assiduously to ensure a rapid recovery in 2021. We remain committed to implementing programmes to lift 100 million Nigerians out of poverty over the next 10 years.”
The President said liquidity of the economy will be boosted with the withdrawal of subsidy and the reforms of the electricity sector.
He said: “The new petrol pricing regime has freed up resources that was allocated to subsidise petroleum products. Similarly, the ongoing IPPIS verification exercise has closed gaps that encourage ghost workers or pensioners. The service reflective electricity tariffs will help resolve liquidity crisis in the power sector and make the sector attractive to foreign investment.”
He noted that since skills’ deficits limit employment opportunities in the formal economy, various skills’ development programmes are being implemented simultaneously to address the problem frontally.
“For instance, the Government is implementing the Special Public Works programme to provide employment opportunities to 774,000 youths across the 774 local government areas of Nigeria.
“We have also recently introduced the N25 billion Nigeria Youth Investment Fund.
“We thank all Nigerians, for your perseverance and continued support during these difficult times. We remain unwavering in our commitment to actualise our vision of a bright future for everyone.”
On the performance of the 2020 budget, Buhari urged the lawmakers to recall that the 2020 ‘Budget of Sustaining Growth and Job Creation’ was amended in response to recent fiscal pressures.
He added: “I am glad to report that these efforts enabled us to effectively respond to the public health challenge of Coronavirus outbreak and moderate economic impact.
“Pursuant to our revised assumptions, the amended 2020 Budget was based on a benchmark oil price of $28 per barrel; oil production of 1.80 million barrels per day; and exchange rate of N360/$.
“Based on these budget parameters, aggregate revenue of N5.84 trillion was projected to fund N10.81 trillion in expenditure.
“The projected deficit of N4.98 trillion, or 3.57 per cent of GDP, is expected to be financed mainly by borrowing.
“In 2020, average daily oil production was 1.88 mbpd up to June, as against the revised estimate of 1.80 mbpd for the entire year.
“However, the market price of Bonny Light crude averaged $40.79 per barrel, significantly higher than the revised benchmark price of $28.
“As at July 2020, the Federal Government’s actual revenue available for the budget was N2.10 trillion.
“This revenue performance was only 68 per cent of our pro-rated target in the revised 2020 budget.
“At N992.45 billion, oil revenue performed well above our budget target, by 168 per cent.
“Non-oil tax revenues totalled N692.83 billion, which was 73 percent of the revised target.”
He said that in order to improve independent revenue performance, he had directed that the cost profiles of Government Owned Enterprises (‘GOEs’) should be scrutinized and limits imposed on their cost-to-revenue ratios.
He said he has also ordered Supervising Ministers to ensure closer monitoring of the revenue generating activities and expenditures of the Government Owned Enterprises.
On the expenditure side, Buhari said a total of N5.37 trillion had been spent as against the pro-rated expenditure of N5.82 trillion as at end of July 2020.
Accordingly, he said that the deficit was N3.27 trillion which represents 66 per cent of the revised budgeted deficit for the full year.
He added: “Despite these challenges, we met our debt service obligations.
“We are also up to date on the payment of statutory transfers and staff salaries, while overhead costs have been significantly covered.
“For the first time in recent years, we commenced the implementation of this year’s capital budget in the first quarter.
“As at 15th September 2020 a total of about N1.2 trillion had been released for capital projects.
“Every Federal MDA has received at least 50 per cent of its 2020 capital expenditure budget, in line with my earlier directives.”
He lamented that revenue generation remained a major challenge to the nation’s economy.
“Nevertheless,” the President said, “Government is determined to tackle the persisting problems with domestic resource mobilization, as there is a limit to deficit financing through borrowing.”
He added: “The time has come for us to maintain a healthy balance between meeting our growing expenditure commitments and our long-term public financial health.”
President Buhari also spoke about the key achievements of his administration in the 2020 fiscal year.
He said that his administration implemented several priority projects over the course of the year.
Buhari added: “Government has delivered on key policies, programmes and projects in these priority areas.
“In agriculture, we have recorded appreciable success in rice and other crops mainly through the Anchor Borrowers Programme and the Presidential Fertilizer Initiative, anchored by the Central Bank of Nigeria and the Nigeria Sovereign Investment Authority, respectively.
“We are also accelerating the construction of 337 rural roads around key agricultural corridors to enhance access to market and reduce post-harvest losses.
“These efforts have reduced the adverse impact of Coronavirus on our food availability, prices and security.
“We have made progress on the railway projects connecting different parts of the country.
“The Lagos-Ibadan Line will soon be operational. The Abuja-Kaduna Line is running efficiently.
“The Itakpe-Ajaokuta Line was finally completed after over 30 years since it was initiated and commissioned in September 2020.
“Arrangements are underway to complete the Ibadan-Kano Line.