Minister of Finance, Zainab Ahmed has said Nigeria may slide into its second recession in four years if a strong Q3 GDP is not attained.
Ahmed disclosed this while speaking at the opening of the 5-day interactive session on the 2021-2023 Medium Term Expenditure Framework (MTEF), and Fiscal Strategy Paper (FSP), held Thursday in Abuja.
Speaking at the event, she said: “Nigeria is exposed to spikes in risk aversion in the global capital market, which will put further pressure on the foreign exchange market as foreign portfolio investors exit the Nigerian market,” the minister said.
“Nigeria’s Q2 GDP growth is in all likelihood negative and 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.
“In response to the developments affecting the supply of foreign exchange to the economy, the Central Bank of Nigeria (CBN) adjusted the official exchange rate to N360, and more recently to N379.”
Ahmed said customs duty collection in 2020 will be adversely affected by the disruption in business and logistics as a result of the COVID-19 pandemic.
She said government domestic revenues have reduced due to the containment measures taken by the federal government and the consequent reduction in taxation.
“Consequently, the projections for customs duty, stamp duty, value-added tax, and company income tax revenues were recently reviewed downwards in the revised 2020 budget,” she said.
“Customs revenue has generally performed close to target over the last few years, exceeding target in 2019.
“There has been some improvement in company income tax and VAT remittances; we expect significant improvements in VAT collections with the new VAT rate of 7.5 per cent.”
The minister said while giving details that the revenue performance marked 61.4 percent over the past five years with some reforms yielding good results.
“I believe we can do more to improve revenues, especially remittances from government-owned enterprises, possibly up to N1 trillion annually,” she added.
“Support of the national assembly, by ensuring coordinated oversight, will contribute to achieving targets.”