How economy climbed out of recession, by minister of Finance

Ahmed, who spoke at a meeting between the Leadership of the National Assembly and ministry, however, said   the challenges brought about by COVID-19 made government’s revenue to drop by 65 per cent in 2020.

Senate President Ahmed Lawan and Speaker Femi Gbajabiamila had attributed the country’s exit from recession to the harmony and cooperation between the Executive and Legislative arms of government.

Ahmed however, attributed the development to several efforts by the fiscal, monetary, and trade authorities. She said that the government spent more than was budgeted for on debt servicing for both local and foreign debts in 2020 by about two percent.

The minister said the challenges in 2020, which significantly disrupted the micro-economic development of the country with crude oil prices crashing to as low as $20 from $72 per barrel, made  government’s revenue to crash.

Her words: “Another key development for Nigeria was the massive output cut by OPEC in the international market, which was designed to stabilise the crude oil market prices. This meant that the 2020 budget had to be revised.

“The impact of this development is that revenue went down by about 65 percent.”

Ahmed said in response to the development and with the support of the National Assembly, a number of measures were taken, such as the review of the exchange rate.

The minister added: “The effect was that our country went into recession in the third quarter. However, due to the significant stimulus as well as other interventions by the fiscal, monetary and trade authorities, a mild recovery has been recorded in the fourth quarter of 2020 with a positive growth of 0.11 percent. This means that the country has technically exited recession as we had projected.

“Oil price was fixed at $28 per barrel; oil production was 1.8 million barrel per day, but the performance was 1.7 million barrel per day. Exchange rate was set at N360, but we closed the year at N375.”

She said inflation was targeted at 14.13 percent, but “we closed the year at 14.89 per cent.”

According to her, “GDP growth rate was targeted at 4.2 per cent negative growth, but we were able to improve on that and at the end of 2020, it was -1.9 per cent.”

She added that as at the end of 2020, Federal Government’s retained revenue was N3.94 trillion, representing 73 percent of targeted revenue.

The federal government share of the revenue, Ahmed explained, was N1.5 trillion which represents 157 per cent performance over and above the target.

This, she explained, was because  crude oil prices performed better than the projection.

She said: “Non-oil revenue collection stood at 79 per cent, Company Income tax and VAT performed at 82 per cent and 68 per cent respectively. Customs revenue collection was 79 per cent. Considering the challenges of the year, this is a good performance; in fact, this performance is higher than previous years.”

On government’s expenditure during the year, Ahmed said: “The N9.97 trillion amended estimate (excluding government funded enterprises) performed at 102 per cent. This means that there was two per cent spending above what was appropriated. This spending arose specifically because of a higher debt service repayment for both local and external debt.

“As at the end of the year, we had N1.7 trillion that has been released as capital expenditure, representing 89 per cent of the capital expenditure. The extension granted by the National Assembly enabled the Ministries, Departments, and Agencies to implement the capital budget up to 100 per cent of the amount that has already been released to them.

“The extension meant that agencies could continue to spend the money that has been released to them. Wed have made an assessment and as at the end of the first week of February, I am afraid to report that the performance report of the extended amount was averaging about 30 per cent. We are going to make another assessment by the end of February.”

She also disclosed that as of December 2020, the government had released about N115 billion for COVID 19 expenditure, adding “after that, there have been more releases and we will provide details on that.”

Senate President Lawan said that the meeting was specifically for the principal officers of the National Assembly to interact with the minister on the continued implementation of the 2020 capital budget.