COVID-19: Economy May Suffer Further Decline Over Rising Infection – FG Warns

..As stimulus package hits N2.3trillion

.. Seeks External Support For 2020 Budget

By Matthew Ogune, Abuja

The Federal Government, Tuesday warned that the country may witness further decline in economic growth due to rising rate of the COVID-19 infections.

Minister of State for Budget and National Planning, Clement Agba issued the warning in Abuja at a virtual Community Of Practice (COP) meeting of commissioners of economic planning.

According to Agba, as a result of rising infections, the continuous global melt down, the increasing unemployment on account of layoffs in all sectors of the economy, the economic growth could contract to about -8.9 percent in 2020, in the worst-case scenario and -4.4 percent in the best-case scenario without any form of stimulus to the economy.

To prevent a potential deep recession and accelerate quick recovery of the economy, the minister noted that the government has developed a three broad strategies aimed at retaining and creating jobs, increasing productivity, ensuring social stability and addressing long-standing economic vulnerabilities as envisaged in the Economic Recovery and Growth Plan (ERGP).

Acknowledging the marginal increase in the price of crude oil in the international market, Agba regretted that the cut in daily production quota by OPEC still dwarfed the much required revenue needed to rejig the weakened economy.

Disclosing that the total estimated stimulus package by the Federal Government of Nigeria is N2.3 trillion, he said that the package consist of N500BFGN intervention fund, N1.2trillion CBN intervention funds, N334billion BOl/Bilateral/Multilateral interventions and additional FGN support of N300 Billion.

The minister explained that the packages consist to a large extent, of a combination of fiscal and monetary policies, sectoral interventions, and social programmes.

Adding: “The flscal and monetary policies will support states, businesses, households and individuals through grants, tax relief, payroll support, tariff reductions and direct support to the health sector”

“The real sector interventions will focus in particular on mass agriculture, mass housing, public works, solar power installation and support to small businesses.”

He noted that a common feature of these interventions is that they will create a large number of jobs, empower farmers and entrepreneurs, use up to 100percent of local materials, conserve foreign exchange and have guaranteed offtake of outputs especially in agriculture and housing.

He further disclosed that the government has commenced mobilisation of external support and funding for the 2020 budget by engaging multilateral donor agencies to access additional funding for crisis response.

According to him the government is engaging the International Monetary Fund (IMF) for – $3.4bn, World Bank for – $25n, the AFDB for – $0.5bn, African Export-Import Bank for – $0.5bn, and ISDB for -$113m.

The minister added that the government is also seeking for moratorium from official partners on bilateral and multilateral debt and arrangements to secure commercial debt relief.

He continued: “We are also taking steps to increase our non-oll revenue generation. The steps includes but not limited to VAT reforms in the Finance Act 2020 (maintaining the increase in VAT rate to 7.5%), customs administration enhancement, tax incentives and exemptions, increase remittances and recovery of unremitted revenues from Government Owned Enterprises (GOEs), increase revenues from cross-border business transactions, unlock value from FG assets that are lying idle or under-utilised, incentives the use of up to N2tn of pension funds for roads and housing development etc. States are therefore encouraged to emulate and do more.”