Following the impact of the outbreak of Coronavirus on the global crude oil price, the Federal Government of Nigeria has said that it may reduce the approved 2020 National Budget, totalling N10.6trillion.
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Briefing newsmen after a meeting with President Muhammadu Buhari in Abuja, Minister of Finance, Budget and National Planning, Hajiya Zainab Ahmed, said a five-man committee has been constituted to tackle the issue.
She revealed that that membership of the committee includes herself; the Minister of State, Budget and National Planning, Clement Agba; the Minister of State, Petroleum Resources, Timipre Sylva; the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele; and the Group Managing Director (GMD), the Nigeria National Petroleum Corporation (NNPC), Mele Kyari.
Hajiya Ahmed further disclosed that the committee would revisit the crude oil benchmark price earlier put at $57 per barrel and ensure by its reduction.
Recall that the National Assembly had passed the 2020 budget at $57 per barrel Oil Benchmark Price before it slumped to $31 per barrel due to the outbreak of COVID-19 in some countries across the world.
In the meantime, Nigerians have been advised to brace up for a tough time as the economy is about the witness a drastic decline following the effect of the virus.
Analysing the implications of the virus for the nation’s economy, particularly for the projected GDP growth rate and real sector performance, a researcher and economist, Dr Adeniran Adedeji, noted that the virus has already hit world economic giants such as China, Italy and the USA with huge economic cost to the countries, especially their growth potential in the 2020 fiscal year.
Dr Adedeji stated: “The implication is lower revenue, which will further shrink an already tight fiscal space. This might lead to an economic slowdown, as budget implementation becomes a major issue. The productive sectors of the Nigerian economy will also be affected in other ways. Coronavirus is affecting the global supply chain, thereby limiting access to some final and intermediate goods.
He added: “This could affect the service sector in Nigeria that relies on importation from China. The manufacturing sector might also be unable to access vital inputs due to the disruption of the global supply chain. Lastly, business uncertainty and risks have grown with Coronavirus and this will significantly reduce investment inflow into the country.”
Also lending a voice on the implication of this development on the Nigerian economy, the Lagos Chamber of Commerce and Industry, noted that the price of crude oil price falling to an all-time low of $45.27 per barrel last Friday, against the oil price benchmark for 2020 budget at $57 per barrel, the slump in revenue could cause significant dislocations in the 2020 budget and in the economy, especially for a country already grappling with challenges of weak revenue performance and a complete erosion of fiscal buffers.