The Federal Government on Friday declared that Nigeria is heading towards another recession in the fourth quarter of this year 2020.
According to the Government, research has shown that the country’s Gross Domestic Product(GDP) for the second and third quarters of this year was projected to be negative.
It added that this implied the country would enter into a second recession in four years.
Zainab Ahmed, the Minister of Finance, Budget, and National Planning, stated that the country’s real GDP had been projected by the National Bureau of Statistics to contract by 4.2% in 2020, as against the former projected growth of 2.9%.
She said, ” Q2 and Q3 2020 GDP growth is projected to be negative, which means that the country will lapse into a second recession in four years”.
She also made it known that the Federal Government’s earnings came down by about 65% following the cuts in oil production.
Ahmed discussed during a virtual consultative public forum in Abuja where she presented the Draft ‘2021-2023 Medium Term Expenditure Framework/Fiscal Strategy Paper’.
She stated that the economy was faced with serious challenges in the first half of the year as the macroeconomic environment was significantly impeded by the COVID-19 outbreak.
According to Ahmed, the price of crude oil dropped from $72 per barrel in January to below $20 in April 2020, making unsustainable the crude oil benchmark of the 2020 budget.
” The massive output cut by OPEC and its allies to stabilize the global oil market, with Nigeria contributing about 300,000 barrels per day of production cuts, resulted in about 65 percent decline in projected net 2020 government revenues”, she said.
She added that the decline in revenue was from the oil and gas sector and had severe consequences on foreign exchange inflows into the economy.
The minister said, “Unless we achieve a very strong Q3 2020 economic performance, the Nigerian economy is likely to lapse into the second recession in four years, with significant adverse consequences”.
Zainab Ahmed also said that the Federal Government planned to spend N11.86tn in the year 2021.
According to her, Nigeria’s monetary wealth would suffer a deficit of N5.16tn because of the Government’s projected ability to generate only N6.98tn revenue all in 2021.