Nigerians on Thursday July 21, 2016 got a piece of bad news – the economy is in recession.
But, there is no need to panic because it will be short, according to Finance Minister Mrs Kemi Adeosun.
Mrs Adeosun, broke the depressing news
to Senators in plenary while briefing them on measures adopted to get
the economy out of the woods. She said the Federal Government had
released N247.9 billion in the last two months for capital expenditure.
She said N60 billion would be released
for capital vote in the next few weeks, adding that N74 billion went to
the Works Ministry.
All the releases, Mrs. Adeosun said, had been fully cash-backed.
The Minister, however, told the
Senators that the recession would be a very short one because the
government had measures to reverse the trend.
She said Nigerians should not dwell on
the recession but rather on where the country is going through the
measures being taken to save the economy.
Mrs. Adeosun said: ”Is Nigeria in
recession? Technically. If you go into two quarters of negative growth,
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. I
think if we are in recession, 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 Quarter Three.”
“We are not the only country in
recession; many countries are doing far worse than us. But for Nigeria,
what Nigerians want to know is ‘how’s that going to affect me’ and I
want to assure everybody that what we are doing is going to work and
it’s going to turn this economy around,” the minister said.
She insisted that despite the downturn, Nigeria’s economy remained the biggest in Africa and would continue to be so.
On the N247.9billion released, Mrs
Adeosun noted that N107 billion was for projects in the Works and
Housing sector. Agriculture received N29.1 billion.
She asked the lawmakers to continue to believe in the country’s ability to recover from its economic problems.
The International Monetary Fund (IMF)
has said that Nigeria’s economy may contract by 1.8% this year. To Mrs
Adeosun, this should not cause panic.
“I am not too worried about the IMF
projection. I will tell you why because IMF job and function is global
economic surveillance. They equally issued a negative report on Britain
as a result of Brexit,” she said, adding: “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 remain extremely confident, as I
said, around Nigeria. IMF has given their projections which is we may
continue into negative territory and I am not sure what we have seen
suggests that. ”
On what was inherited from the immediate past administration, Mrs. Adeosun said: “I inherited very little by way of reserves.
“I inherited significant debt, contractor debt. Cash calls of $5 billion dollars outstanding to the oil companies.
“I mentioned the cash calls of $5
billion dollars outstanding to the oil companies. I equally mentioned
the fact that many of the contractors even though we have paid them N107
billion” find it very difficult to work because they are owed and some
of them have not been paid since 2012.
“Their claims are over N390 billion. So,
I didn’t inherit reserves that are positive; I inherited reserves that
tend to be more negative than positive because the economy is actually
in very good hands and we are doing absolutely our best to get through
this difficult period and I explained how we are doing that; we have
been extremely disciplined around our spending.
“We are investing in essential
infrastructure; we have released N74 billion to Works in two
months compared to N19 billion for the whole of last year. We are doing
everything possible to avert and to manage the situation which we didn’t
create, unfortunately, but which we inherited and we as a nation we
must all get out of.”
On the loans the government has taken to fund the budget, Mrs. Adeosun described them as more of local loans.
“We have been borrowing largely from the
domestic market because we needed to get the exchange rate sorted out
to enable us borrow from the international market,: she said, adding:
“The international borrowings will begin
to come in quarter three; that is always our projection. We would take
initial money from Nigeria as we sorted things out and we go on the road
to borrow internationally.”
Adeosun said: “The projected rate of
implementation of the budget I found that difficult question to answer
simply because there are quite a few moving part in terms of our revenue
and many of our revenues will come in Quarter Three.
On areas of priority, she said: “I
think we have been fairly consistent that we needed to invest in
infrastructure and in our releases we have tried to prioritise those
areas and also to work with seasonality.
”For example, Works Ministry needs to
have their money during the dry season because during the rainy season
work stops and we are trying to time the releases to ensure maximum
impact.”
On the 2017 budget, “I believe the
minister of Budget and Planning has started working on putting that
document together and I am very sure in good time for us to go back to
the calendar that we like, which is the December calendar.
”The releases are fully cash backed. We
have stopped the practice of releasing or approving releases that are
not cash backed. We have changed that process, we now start from the
position how much cash do we have and then we release appropriately.”
On the exchange rate, Mrs Adeosun said: “We predicated the budget on N197 and the rate is now N280 per dollar.
On social intervention, she said: “The
question about the interest of Nigerians, I think it is a very good one.
Job creation and reserves. One of the things that I mentioned that we
have done is release this money for the first time for the social
intervention programmes.
”We have released N15 billion of
capital and we put in N5 billion this month for recurrent and so that
recurrent will continue to increase as they roll out the implementation
of things like the duty calls, the agriculture extension workers and the
other job creation initiatives.
“Also beyond that, the police. One of
the upside from the cleaning we have done on the pay roll was that the
police were able to recruit 10,000 new officers but there is no impact
on their salaries because we have cleaned up those who have or who
shouldn’t have been there and so they can now create 10,000 new jobs.
So, there is quite a bit of job creation activity going on as a result
of some of the interventions we have done.”
On what the government inherited, the
minister said: “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 significant debt,
contractor debt. Cash calls of $5 billion dollars outstanding to the oil
companies. I mentioned the cash calls of $5 billion dollars outstanding
to the oil companies.
“I equally mentioned the fact that many
of the contractors even though we have paid them N107 billion find it
very difficult to work because they are owed and some of them have not
been paid since 2012. Their claims are over N390 billion.
The international borrowings will begin
to come in Q3 that is always our projections we would take initial money
from Nigeria as we sorted things out and we go on the road to borrow
internationally.”
If you look at what is happening in the
petroleum sector. Before subsidy we were subsidising around 45 million
litres of fuel a day. Now without subsidy, usage has dropped to 26
million litres; so what does that tell you? All the smuggling that was
going out of the country based on the subsidy that we were providing
have stopped; those are real savings to the economy, which we are now
redirecting into the essential infrastructure that will get this economy
going.”
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