The World Bank has proposed a $1.5 billion stimulus for Nigeria’s 36 states to cushion the economic effects of the Covid-19 pandemic.
The plan is part of the World Bank’s package for immediate fiscal relief for Nigeria, following the discussion between its Country Director and the Economic Sustainability Committee, chaired by Vice President Yemi Osinbajo.
The Minister of Finance, Budget and National Planning, Zainab Ahmed said ”the package will involve policy-based budget support for the Nigerian government, focusing on measures to maintain macro financial stability and create fiscal space for proposed stimulus.”
Programme for results
Mrs. Ahmed, who spoke to State House correspondents after Thursday’s virtual meeting of the National Economic Council, NEC, presided over by Professor Yemi Osinbajo, said the package would be a programme for results, which the states were already used to implementing.
“So, the immediate fiscal relief for the states, as stated in the presentation, will include the acceleration of an existing programme to enable disbursement by end of September.
“The proposed $1.5 billion plan by end of September, would have been disbursed to the states…We are looking at an average of between N150 billion to N200 billion based on the plan to the 36 states.
“These are states that have already made some particular commitments and achievements so that they will be able to get immediate disbursements of parts of these funds.”
Mrs Ahmed said that the Nigerian government was committed to supporting the financial viability of states through several measures, including the suspension of payments in respect of commitments and debts that have been secured by the states at the federal levels.
“So, we have already implemented suspension of deductions of a number of loans that have been taken by the states from April and also in May,” she stated.
The minister said that the World Bank Country Director, at the meeting of the Economic Sustainability Committee, spoke in respect of their assessment of the impact of Covid-19 on the Nigerian economy and their review of the measures that government has taken.
“The World Bank maintains that the impact of the Covid-19 on Nigeria will lead to severe amplified human and economic cost, which will move the country into a recession,” Mrs. Ahmed said.
According to her, a report was presented to the NEC on the structures that the Nigerian government is looking at and putting in place to tackle the both the health and economic challenges posed to the country by the Covid-19 pandemic.
“On health, there is a rising rate of infections as reported by the NCDC; we have today over 6,000 cases and this is projected to rise to almost 300,000 by the end of August. Resources required to combat Covid-19 such as ICU beds, isolation centres, ventilators, reagents, test kits, masks, gloves are also very expensive,” the minister stated.
Mrs Ahmed said that net oil and gas revenue and influx to the federation account in the first quarter of 2020 amounted to N940.91 billion.
She said this amount was a N125.52 billion shortfall, representing 31% of the pro-rated amount that was supposed to have been realised by the end of the first quarter of 2020.
”Covid-19 has resulted in the collapse in oil prices…This will impact negatively, and the impact has already started showing on the federation’s revenues and on the foreign exchange earnings.
“The economic growth in Nigeria, that is the GDP, could in the worst case scenario, contract by as much as –8.94% in 2020. But in the best case, which is the case we are working on, it could be a contraction of –4.4%, if there is no fiscal stimulus,” she explained.
The minister said that the fiscal stimulus plan that being worked out by the Economic Sustainability Committee was aimed at mitigating contraction to a negative –0.59%.
The Finance Minister said that she gave a report on Nigeria’s special accounts to the NEC virtual meeting.
According to her, the balance in the Excess Crude Account as at of 21st of May, 2020, is $72.04 million, while balance in the Stabilization Account was N39.337 billion.
The Natural Resource Development Fund Account had a balance of N125.19 billion on the same date.