The Minister of Finance, Zainab Ahmed, has warned that Nigeria may slide into a second recession in four years if a very strong third-quarter 2020 economic performance is not achieved.
Ahmed gave the warning today August 13 while speaking at the opening of a five-day interactive session on the 2021-2023 Medium Term Expenditure Framework (MTEF), and Fiscal Strategy Paper (FSP), held in Abuja. The interactive session was organized by the house of representatives committee on finance chaired by James Faleke.
Ahmed, who was represented by the Minister of State for Finance, Clement Agba, said Nigeria’s economy which has been affected by the COVID-19 pandemic, may lapse into a second recession in four years if a third-quarter economic performance is not achieved.
“Nigeria is exposed to spikes in risk aversion in the global capital market, which will put further pressure on the foreign exchange market as foreign portfolio investors exit the Nigerian market. Nigeria’s Q2 GDP growth is in all likelihood negative and unless we achieve a very strong Q3 2020 economic performance, the Nigerian economy is likely to lapse into a second recession in four years with significant adverse consequences.
“In response to the developments affecting the supply of foreign exchange to the economy, the Central Bank of Nigeria (CBN) adjusted the official exchange rate to N360, and more recently to N379.” she said
According to the Minister, COVID-19 containment measures, although necessary, have inhibited domestic economic activities which have had a rippled negative impact on taxation and other avenues government generates revenues.
“Consequently, the projections for customs duty, stamp duty, value-added tax, and company income tax revenues were recently reviewed downwards in the revised 2020 budget. Customs revenue has generally performed close to target over the last few years, exceeding target in 2019.
There has been some improvement in company income tax and VAT remittances; we expect significant improvements in VAT collections with the new VAT rate of 7.5 per cent” she said