The Federal Government on Thursday warned that strong indications have emerged that the nation’s economy was likely to lapse into a second recession in four years, with significant adverse consequences if a very strong Q3 2020 was not achieved.
The Federal Government has raised it that Nigeria’s Q2 GDP growth is in all likelihood negative, just as it said that Nigeria is exposed to spikes in risk aversion in the global capital markets, which will put further pressure on the foreign exchange market as foreign portfolio investors exit the Nigerian market.
Speaking on Thursday, in Abuja when he appeared before the Senator Olamilekan Adeola, APC, Lagos West led Senate Joint Committee on Finance and National Planning at the ongoing interactive session on the 2021-2023 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), Minister of State for Budget and National Planning, Prince Clem Agba disclosed that with the financial crisis due to the global COVID-19 pandemic, the Federal Government has instituted fiscal measures aimed at improving revenue and entrenching a regime of prudence with emphasis on achieving value for money.
He said, “Nigeria’s Q2 GDP growth is in all likelihood negative, and unless we achieve a very strong Q3 2020 economic performance, the Nigerian economy is likely to lapse into the second recession in four years, with significant adverse consequences.
“In response to the developments affecting the supply of foreign exchange to the economy, the Central Bank of Nigeria (CBN) adjusted the official exchange rate to N360/US$1, and more recently to N379/US$.
“Consequently, the projections for Customs duty, Stamp Duty, Value Added Tax, and Company Income Tax revenues were recently reviewed downwards in the revised 2020 budget,” he disclosed.
According to him, the goal of the fiscal interventions would be to keep the economy active through carefully calibrated regulatory or policy measures designed to, among others, boost domestic value-addition, de-risk the enterprise environment, attract external investment and sources of funding.
Agba said that the Federal Government was also improving the tax administration framework to optimize government revenue. He stressed that this had been a major thrust of the Administration’s Strategic Revenue Growth Initiative (SRGI).
Agba who represented the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, at the 5-day interactive session, said, “We have included in the 2021 – 23 MTEF/FSP, a Tax Expenditure Statement (TES) overview which seeks to dimension the cost of tax waivers/concessions, and evaluate their policy effectiveness.”