Economy: Things will get better – FG
The Federal Government has said Nigeria’s troubled economy will begin to pick up in the 3rd quarter of the year.
Minister of Finance Mrs. Kemi Adeosun and that of Budget and National Planning Udoma Udo Udoma stated this at separate events in Abuja yesterday.
They admitted the country “is technically in economic recession” but were upbeat it would be “a short one.”
Briefing senators on the state of the country's economy, the finance minister said: “Technically, we are in recession but I don’t think we should dwell on definitions I think we should really dwell on where we are going.
“...What I will like to say is we are going to come out of it and it would be a very short one because the policies that we have would ensure that we don't go below where we need to go and I think with what we are doing we would begin to turn the corner I believe by third quarter," she said.
Measures being put in place to revive the economy, she said, included
prudent management of resources, increasing capital spending from 10 to 30 percent, declaring war on wastages, not funding nonessential items, reducing the wage bill and diversifying the economy.
Speaking on the prediction of the International Monetary Fund (IMF) which slashed Nigeria’s GDP growth forecast from 2.3 percent in April to – 1.8 percent, the minister urged Nigerians to be confident in the measures being taken by the government.
“I am not too worried about the IMF projection ... they equally issued a negative report on Britain as a result of Brexit. I don’t think we should panic every time IMF speaks. I think we need to be confident around what we are doing and where we are going.
“I remained extremely confident as I said around Nigeria ... Agriculture output seems to be going up.
“If you look at what is happening in the petroleum sector before subsidy we are subsidising around 45 million dollars litres of fuel a day. Now without subsidy usage has dropped to 26 million litres. So, what does that tells you? All the smuggling that was going out of the country based on the subsidy that we are providing have stopped. Those are real savings to the economy which we are now redirecting into the essentially infrastructure that will get this economy going,”she said.
Asked to be specific on petroleum subsidy, she said, “I can confirm that there is no more subsidy”.
She projected that the federal government would record over 60 percent in the implementation of 2016 budget.
She said N247.9 billion has been released for capital projects and that N60 billion more would soon be released.
“Ministry of Works had received N74bn in the last two months compared to N19bn received for the whole of last year. Agriculture which is a strategic focus of this government has received N21.9bn compared to just N4bn for the whole of last year. And transport has received N22bn compared to just N6bn for the whole of last year, “she said.
Responding to question on what was inherited from the administration of Goodluck Ebele Jonathan, she said they inherited cash calls of $5 billion outstanding to oil companies and N390 billion local contractors’ debt.
“I think at a time like this blaming who was responsible doesn’t actually take us anywhere but I will tell you what I inherited. I inherited very little by way of reserves, I inherited cash calls of $5 billion outstanding to the oil companies,” she said.
She said they have paid N107 billion out of the N390 billion local contractors debt inherited from Jonathan’s administration.
On fertilizer, she said they inherited N65 billion debt on fertilizer and that they have paid N20bn.
She said the failure of the previous administration to pay fertilizer contractors in 2014 negatively affected supply of the commodity and food production in the country. She was optimistic that the country would record bumper harvest this year.
‘Private sector has role to play’
On his part, Udoma said the government was expecting that by the third-quarter of the year, the economy would start to pick up and “finish the year in a positive territory.”
The minister was fielding questions from State House correspondents after the National Economic Council (NEC) meeting presided over by Vice President Yemi Osinbajo.
“We expect to be marginally positive by the end of this year. But by next year, we will now start to pick up, and we will have much more growth next year,” he said.
He said the government was focusing on non-oil - agriculture solid minerals and manufacturing, explaining that the current situation was an opportunity “to finally move away from total dependence on the single commodity, crude oil.”
Asked to confirm if the country was in recession, Udoma responded: “Recession is basically when you have two quarters of negative growth. We had a first quarter of negative growth, and we’re still waiting to get all the figures for the second quarter which has just ended in June. The National Bureau of Statistics will be giving us all the figures.
“But if as we suspect the second quarter is also negative, then of course, technically you could say that we’re in recession if those figures turn out to be so. But even if we are not, the situation in the economy right now is one that of course we are addressing.
“Some of it was expected, some of it was not. We did expect the low oil price, but we did not expect the level of disruption that we got in the Niger Delta such that oil production went down, and we’re not likely to achieve the 2.2 million barrel per day because it went down to 1.2 million barrel per day; a little over about 1.3 million barrel per day.
It had also affected power supply because a lot of power was fired by gas.
He said the government expects the private sector to play a key role in turning around the economy, adding that the role of the federal government is to provide the enabling environment.
‘We’ll explore new ideas in gas, agric’
Also yesterday, President Muhammadu Buhari said his government would continue to welcome innovative ideas in the gas, technology and agricultural sectors to re-position the economy.
His spokesperson Femi Adesina in a statement quoted him as saying this at the State House in Abuja yesterday while receiving the letter of credence of the High Commissioner of the Republic of India, Mr. Nagabhushana Reddy.
President Buhari said Nigeria would also strengthen cooperation with the Asian country on education, technology transfer and military training, agriculture and trade.
Reddy had earlier said the Indian government was looking forward to consolidating its relationship with the ministries of petroleum, agriculture, trade and investment, and power, housing and urban development for various projects.
The statement said Buhari also received letters of credence from ambassadors of Gambia, Sri Lanka and Iran, Famara Kassy Gaye, Thambirajah Reveenthiran and Morteza Rahimi Zarchi respectively.
From left: Minister of State for Budget and National Planning, Mrs Zainab Ahmed; Minister of Budget and National Planning, Sen. Udoma Udo Udoma; and Vice President Yemi Osinbajo at the National Economic Council meeting in Abuja yesterday
Minister of Finance, Kemi Adeosun