The Federal Government has confirmed that the nation’s economy is now in recession, following two consecutive quarters of negative growth.
Minister of Budget and National Planning, Udoma Udoma, made the assertion while briefing State House correspondents at the end of the National Economic Council (NEC) meeting, presided over by Vice President Yemi Osinbajo, in Abuja, on Thursday.
The minister was joined at the briefing by Governors Darius Ishaku and Abubakar Bello of Taraba and Niger states respectively.
Also on Thursday, Minister of Finance, Mrs Kemi Nelson, who appeared at the Senate plenary, said the nation’s economy had technically entered into recession, going by the two digit inflation rate it recorded in June.
The miniser, who briefed lawmakers on the strategies and policies being adopted by the Federal Government to address the economic problems, however said the recession being experienced was not full blown, adding that she was not bothered by the report of the International Monetary Fund (IMF).
When asked to confirm reports on the negative status of the economy, Udoma after the NEC meeting, said since there had been two quarters of negative growth, the economy could be said to be technically in recession.
He noted that the result of the performance of the economy for the second quarter was being expected, adding, however, that the expectation was that it would still be negative.
He, therefore, said government was addressing the poor economic situation of the country, which he blamed on low oil production occasioned by the activities of militants in the Niger Delta.
He said such activities had also had a devastating impact on power supply in the country.
The minister, however, assured that things were looking up, as there were reasons to believe that the economy would be marginally better at the end of the year before assuming much better growth next year.
Udoma noted that the current challenges presented a good opportunity for the nation to move away from a single product economy, noting that government was now focusing on the area of non-oil.
According to him, the responsibility to shift the country away from a single economy was that of the private sector with the Federal Government providing an enabling environment.
He said revenue accruing to government had improved, especially from the activities of tax collection by the Federal Inland Revenue Service (FIRS).
“Recession is basically when you have two quarters of negative growth. We had a first quarter of negative growth and we are still waiting to get all the figures for the second quarter which has just ended in June.
“The National Bureau of Statistics (NBS) will be giving us all the figures, but if as we suspect, the second quarter is also negative, then, of course, technically, you could say that we are in recession if those figures turned out to be so.
“But even if we are not, the situation in the economy right now is one that, of course, we are addressing.
“Some of it were expected, some of it were not. We did expect the low oil price but we did not to expect the level of disruption that we got in the Niger Delta, such that oil production went down and we are not likely to achieve the 2.2 million barrel per day because it went down to 1.2 million barrel per day, a little over about 1.3 million barrel per day.
“So, you can imagine the impact. Measures are being taken to address those issues. We expect that by the third quarter, we will start to pick up and we expect to finish the year in positive territory. That is what we are expecting.,” he said.
On increase in tax collection, he disclosed that more money would be shared among the tiers of government in the next meeting of the Federal Account Allocation Committee (FAAC).
While noting that the Federal Government had continued to pay salaries, he said “let me also say that we are about to have FAAC this month, there is actually an increase in the amount that is going to be available in FAAC. There is an increase because of FIRS, our tax collection is going up.
“Our tax collection is already improving. There is no doubt that we are actually going through a difficult time, but things are improving.”
The minister disclosed that he presented the Medium Term Expenditure Framework (MTEF) for 2017-2019 to the council, which provides the broad framework for annual budget planning and fiscal management over a three-year period.
He said NEC also received an update on the budget support facility offered by the Federal Government with 35 states applying for the facility.
Out of this, 28 states met the requirements while seven states sent their required documentations late and were being processed.
Minister of Finance reported to the council that the balance in the Excess Crude Account (ECA) as of July 20, 2016 stood at $3.93 billion.
The council was informed by the Central Bank Governor that all bank customers that operated domiciliary accounts were now permitted to lodge dollar cash into their non-export domiciliary accounts, subject to the provisions of the Money Laundering Act.
NEC also received a proposal for a self-funded JVC Cash calls as against the present situation where upstream JVC arrangement in Nigeria’s oil and gas industry were incorporated JV with NNPC and the IOC partners.
At the Senate hearing on Thursday, Adeosun, who briefed the lawmakers, said “technically, our economy, for now, is in recession because if you go into two quoters of negative growth, your economy can be said to be in recession. Thus, technically, we are in recession, but I don’t think we should dwell on the definition. I think we should really dwell on where we are going.”
On the report of the IMF, which indicated that the economy would shrink by more than one per cent, the minister said that the government was not bothered, adding that the projection was not accurate.
“I am not too worried about the IMF projection, because the projections have not always been accurate. They equally issued a negative report on Britain as a result of Brexit. I don’t think we should panic every time IMF speaks. I think we need to be confident around what we are doing and where we are going. I remained extremely confident as I said around Nigeria,” she said.
Adeosun further explained that the government was making efforts to turn things around fast, by implementing the 2016 budget in a strategic manner.
According to her, the government had, so far, released a total of N247.9 billion as capital components of the 2016 budget, adding that out of the amount so far released, N74 billion went to the Ministry of Works for infrastructural development; while the sums of N21.6 billion and N22 billion were released and cash backed for execution of capital projects in the agriculture and transport sectors.
She also said another N60 billion of capital projects would be released for projects execution in a few weeks.
“I think at a time like this, blaming who was responsible doesn’t actually take us anywhere, but I will tell you what I inherited. I inherited very little by way of reserves, I inherited significant debt, contractor debt. Cash calls of $5 billion outstanding to the oil companies.
“Many of the contractors, even though we have paid them N107 billion, find it very difficult to work because they are owed and some of them have not being paid since 2012. Their claims are over N390 billion.
“So, I didn’t inherit reserves that are positive, I inherited reserves that tend to be more negative than positive and we are doing absolutely our best to get through this difficult period,” Adeosun added.
She called on Nigerians to, henceforth, patronise made-in-Nigeria goods to enhance local production and strengthen the Naira.
