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Nigeria may fall into recession again – finance minister

Nigeria may fall into recession again – finance minister

Finance minister Zainab Ahmed said yesterday that unless Nigeria achieves very good economic performance in the third quarter of 2020, the country could fall into recession.

At the opening of an interactive five-day forum on the Medium Term Spending System 2021-2023, MTEF and Fiscal Strategy Paper (FSP), held yesterday in Abuja, Ahmed disclosed this.

The interactive session was arranged by the House of Representatives Committee on Finance, chaired by James Faleke, a lawmaker representing the federal constituency of Ikeja.

Ahmed, who was accompanied by the state finance minister Clement Agba, said the COVID-19 pandemic had placed additional pressure on Nigeria’s foreign exchange.

“Nigeria is vulnerable to increases in global capital market risk aversion, which would place additional pressure on the foreign exchange sector as foreign portfolio investors leave the Nigerian economy,” the minister said.

“Nigeria’s Q2 GDP growth is in all probability negative and unless we achieve very good economic results in Q3 2020, the Nigerian economy is likely to slip into a second recession in four years with major adverse effects.

“The Central Bank of Nigeria ( CBN) has changed the official exchange rate to N360, and more recently to N379, in response to developments affecting the availability of foreign exchange to the economy.”

The minister added that the global trade and logistics disruptions will also have a detrimental impact on customs duty collections by 2020.

According to her, while appropriate, COVID-19 containment measures have inhibited domestic economic activities, with subsequent negative effects on taxation and other government revenues.

“In the updated 2020 budget, therefore, the forecasts for customs duty, stamp duty, value-added tax, and corporate income tax revenues have recently been adjusted downwards,” she said.

“Over the last few years, customs revenue has usually been close to target, meeting target over 2019.

“Company income tax and VAT remittances have increased somewhat; we expect substantial increases in VAT collections with the current VAT rate of 7.5 per cent.”

“I think we can do more to boost revenues, specifically government-owned remittances, probably up to N1 trillion per annum,” she added.

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