Nigeria is heading for another recession in the fourth quarter of this year, the Federal Government declared on Friday.
According to the government, findings showed that the country’s Gross Domestic Product for the second and third quarters of 2020 were projected to be negative.
This, it said, implied that the country would slide into a second recession in four years.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, said the country’s real GDP had been projected by the National Bureau of Statistics to contract by 4.2 per cent in 2020, as against the previous projected growth of 2.9 per cent.
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 said.
She also revealed that the Federal Government’s earnings dropped by about 65 per cent following the cuts in oil production.
Ahmed spoke during a virtual consultative public forum in Abuja where she presented the Draft 2021-2023 Medium Term Expenditure Framework/Fiscal Strategy Paper.
She noted that the economy faced serious challenges in the first half of the year as the macroeconomic environment was significantly disrupted by COVID-19.
According to her, crude price dropped from $72 per barrel in January to below $20 in April 2020, making the $57 crude oil benchmark of the 2020 budget unsustainable.
“The massive output cut by OPEC and its allies to stabilize global oil market, with Nigeria contributing about 300,000 barrels per day of production cuts, resulted in about 65 per cent decline in projected net 2020 government revenues,” the minister said.
She said the revenue reduction was from the oil and gas sector and had adverse consequences on foreign exchange inflows into the economy.
“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,” Ahmed said.
Ahmed also stated that the Federal Government planned to spend N11.86tn in 2021.
According to her, Nigeria’s monetary fortunes would suffer a deficit of N5.16tn because of the government’s projected ability to generate only N6.98tn revenue all in 2021.