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Nigeria at risk of slipping into recession

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Nigerian President Muhammadu Buhari has presented a $34.42 billion budget estimate for the 2021 fiscal year to the joint session of the country’s National Assembly.

Addressing the lawmakers on Thursday, 8 October 2020, in Abuja, Buhari noted that the Nigerian economy may, again, slip into recession, the second within five years of his administration. In 2016, the Nigerian economy went into recession and the reason adduced for that was the delay in appointing principal officers to keep the organs of government working.

However, Buhari blamed the impending recession this year on the damaging effects of COVID-19 on the global economies, including the Nigerian economy. According to him, the Nigerian economy has been hit hard by the COVID-19 pandemic, which drastically cut the demand for oil, the country’s top revenue earner. He recalled that before the pandemic, Nigeria was on a three-year trend of modest, but positive, GDP growth.

Buhari said that the government’s plans to revive the economy included the Special Public Works Programme, which is aimed at employing 774 000 young people across the country. He explained that the 2021 budget was prepared amidst challenging global and domestic environment, due to the persistent headwinds from the COVID-19 pandemic.

“The Nigerian economy is currently facing serious challenges, with the macroeconomic environment being significantly disrupted by the COVID-19 pandemic. Real Gross Domestic Product (GDP) growth declined by 6.1 percent 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.

“GDP growth is projected to be negative in the third quarter of this year. As such, our economy may lapse into the second recession in four years, with significant adverse consequences. However, 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,” he said.

He recalled the introduction of the N75 billion Nigeria Youth Investment Fund, of which N25 billion have been provided in the 2021 budget. The other highlights of the budget include; the oil benchmark price of $40 per barrel, recurrent expenditure of N5.65 trillion, debt service provision of N3.12 trillion, and projected inflation rate of 11.95 percent and GDP growth rate of three percent for 2021.

Earlier in a speech at the session, Senate President Ahmed Lawan reiterated the determination of the lawmakers to pass the 2021 budget before the end of this year. This, according to Lawan, will continue to enable planning and enhanced productivity and efficiency in the management and application of the nation’s resources.

-APA

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