Govt tackling pandemic, recession with fiscal, monetary stimulus packages
Minister of State for Budget and National Planning, Prince Clem Ikanade Agba, has assured Nigerians that the revision of the 2020 budget by the Federal Government was not intended to impose austerity measures on them.
Agba said that President Muhammadu Buhari’s administration was looking at measures that would make economic recovery faster, in the aftermath of the ravages of the COVID-19 pandemic and the looming global recession.
He said the major concern of government was how to ensure the retention of existing jobs and creation of new ones, adding that “we looked basically at how to save lives; how to keep our economy off the ravages of the pandemic by reducing the impact of vulnerabilities.”
According to him, “Worldwide, economies, even the ones that were strong, were going into recession. We did not have enough fiscal buffers, this time around, as we had, as a nation, in 2015.
“So, the concern was how to keep our recession short-lived and shallow; how to stimulate growth to ensure quick recovery, not just a U-shaped recovery but a V-shaped recovery, and how to build resilience going forward after learning some lessons.
“What were the foundational things that we needed to put in place? It was necessary to have some kind of stimulus-both fiscal and monetary- and also try as much as possible to deal with the real sector and the issue of implementation so that we can stimulate growth in the economy.”
The minister spoke as one of the discussants of the “Impact of COVID-19 on the Economy particularly on the 2020 and 2021 Budgets” during a live discussion programme- “Radio Link”- monitored on Radio Nigeria’s Capital FM 92.9 at the weekend in Abuja.
According to him, “The revision of the budget was not to come up with austerity measures. It was to move resources to areas that would give us more impact such as health, agriculture, works and maintenance of our highways, job creation for our youths and women, artisanal miners, support for MSMEs, providing bailouts to critical sectors of the economy, among others.”
He explained that contrary to claims in some quarters that the revision of the 2020 budget had resulted in massive reductions in budgetary allocations, “we have actually put in a lot more funds into the budget than in the original budget; hence we are talking about stimulus.”
According to him, “It is not about budget reduction. The health sector, for instance, got $186 billion more than in the original budget.”
He said the government’s priority also included giving support to the social, health and education sectors and building capacity through training for youths and women.
Agba pointed out that the restructuring and renaming of the Ministry of Communications in July, last year, to function as Ministry of Communications and Digital Economy reflected the new priority of the government.
He said that, in addition to the Crisis Management Committee, under the chair of the Minister of Finance, Budget and National Planning and the Presidential Task Force (PTF) under the chair of the Secretary to the Government of the Federation (SGF), there was the Economic Sustainability Committee headed by the Vice President with focus on diverse economic sustainability programmes.
The minister stated that these programmes included agriculture, recalling that the closure of borders was to encourage consumption of locally-produced rice and local farmers.
He disclosed that in the sustainability plans, there was an on-going strategy to provide solar power to five million homes, pointing out that the National Agency for Science and Engineering Infrastructure (NASENI) was working on this and Nigerians would be taught how to install and repair the solar panels.
Agba, in response to a question on the slump in oil prices, explained that when “we had a pandemic that was reducing demand for oil and leading to a glut in the market, it was affecting Nigeria and Nigerians, the first thing Mr President did about the 9th of March, this year, was to set up the Crisis Management Committee to consider measures to address the fiscal pressures arising from a drop in oil prices at that time.
“Thereafter, the President also set up the PTF, which majorly handled the health aspect of the pandemic and, later on, the Economic Sustainability Committee under the chair of the Vice President.
“Without a doubt, the pandemic has had a lot of impact on our economy as, original projections had fallen short. For example, oil production was initially projected to be at 2.18 million barrels per day. This has been reviewed downward to about 1.8 million barrels per day.
“At the time the 2020 budget was put in place, the oil price was put at $57 per barrel benchmark; but, today, we have about $28 per barrel. All of these have implications for revenue. So, one of the immediate measures that we took was to increase the exchange rate from N305 to N360 per dollar to help in revenue projection.”
He said that with the initial budget, revenue was projected at N8.57 trillion, adding that the Federal Government was now looking at N5 trillion, a decline of about 32 percent.