The federal government on Thursday warned of a recession in Nigeria.
Minister of Finance, Zainab Ahmed said this would happen unless Nigeria achieves a very strong third quarter 2020 economic performance. She spoke at a House of Representatives session on the 2021-2023 Medium Term Expenditure Framework and Fiscal Strategy Paper in Abuja.
Ahmed was represented by the Minister of State for Finance, Clement Agba. The official explained that the COVID-19 pandemic had compounded Nigeria’s foreign exchange headache. Ahmed said the country is exposed to spikes in risk aversion in the global capital markets.
“Nigeria’s Q2 GDP growth is in all likelihood negative and unless we achieve a very strong Q3 2020 economic performance, the economy is likely to lapse into a second recession in four years.”
The minister declared that this time, there might be “significant adverse consequences”. Ahmed added that the disruptions in global trade and logistics would negatively affect Customs duty collections in 2020. On measures to manage the situation, she noted that projections for Customs Duty, Stamp Duty, Value Added Tax, and Company Income Tax revenues, were recently reviewed downwards in the revised 2020 budget.
“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.”
Ahmed, however, expressed hope for increased revenues. She cited remittances from government-owned enterprises.