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Covid-19: Nigerian government explains how it will fund proposed N2.3 trillion stimulus

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Nigerian Government Economic Sustainability Plan

Covid-19: Nigerian government explains how it will fund proposed N2.3 trillion stimulus

The Nigerian Government has released its Economic Sustainability Plan which it hopes will address the economic challenges of the COVID-19 pandemic.

The plan was put together by the Economic Sustainability Committee (ESC) assembled by President Muhammadu Buhari. Members of the committee included the Vice President, CBN Governor, 15  Ministers, GMD NNPC, and the Permanent Secretary.

In the report seen by Nairametrics Research, the teams were expected to deliver the following;

  1. Develop a clear Economic Sustainability Plan in response to challenges posed by the COVID-19 Pandemic;
  2.  Identify fiscal measures for enhancing distributable oil and gas revenue, increasing non-oil revenues and reducing non-essential spending, towards securing sufficient resources to fund the plan;
  3. Propose monetary policy measures in support of the Plan;
  4. Provide a Fiscal/Monetary Stimulus Package, including support to private businesses (with emphasis on strategic sectors most affected by the pandemic) and vulnerable segments of the population;
  5. Articulate specific measures to support the States and FCT;
  6. Propose a clear-cut strategy to keep existing jobs and create opportunities for new ones; and
  7. Identify measures that may require legislative support to deliver the Plan.

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The 76-page report contained recommendations from the committee on what the government should do to bring the economy back on track. Reading through the report, we observe several assumptions made by the committee on the possible effect of COVID-19 oil revenues and the exchange rate. Here are a few;

  • The government opines that if oil revenues averages $30 for the rest of the year, Nigeria will probably earn N88.4b monthly from oil or N1 trillion when annualized.
  • Here is a direct quote from the report: “It is expected that if oil prices average $30 over the rest of the year, oil revenues (assuming Nigerian National Petroleum Corporation reduces Joint Venture operating costs by 20%), would amount to about N88.4 billion monthly. Assuming that non-oil revenues are sustained at the lower level projected in the revised budget estimates, the total allocations to FAAC for the rest of the year would then be around N485 billion a month. This time last year total allocations to FAAC was N669.9 bn monthly. The very steep decline in revenues available for sharing among governments of the federation will have serious implications for wages, overheads, and capital expenditures at Federal, State, and Local Government levels.”
  • The Government budgeted N7.6 trillion from oil revenue for the year while the FG’s portion of the amount is N3.6 trillion.
  • The government in its report also projects Nigeria’s unemployment rate to rise to 33.6% from 23.1% as of September 2018. The Bureau of Statistics is yet to publish unemployment figures since then.
  • Direct quote “Unemployment rate which was 23.1% (or 20.9m people) at the end of 2018 is expected to rise to 33.6% (or 39.4 million people) at the end of 2020 if urgent steps are not taken.”
  • The report also projects Nigeria’s economic growth rate to contract between 4.4% and 8.91% “depending on the length of the lockdown period, the potency of the economic plans that are put in place, and, in particular, the amount of stimulus spending.”

The one year plan basically focuses on achieving mass employment and mass domestic production, which it claims “are not dependent on importation or foreign exchange expenditure.”

Their proposal

The ESC, therefore, decided to adopt the use of a stimulus package which it referred to as a “time tested approach to fighting a recession” even though a stimulus was not used the last time Nigeria experienced a recession in 2016.

In proposing a package the committee claimed it explored 4 scenarios based on an average oil price of $30 for the rest of the year.

  • Scenario 1: With no stimulus, i.e., if we simply stick to our budget the economy will decline by minus 4.40% at best.
  • Scenario 2: With a stimulus of just N500 billion, the economy will decline by minus 1.94%.
  • Scenario 3: With a stimulus of N2.3 trillion, the economic decline will be lower at minus 0.59%.
  • Scenario 4. With a stimulus of N3.6 trillion, there will still be negative growth but only of -0.42%

The committee eventually settled for a variant of scenario 3 which requires a stimulus package of N2.3 trillion. The government explained that the reason for settling for Scenario 3, citing  “the low level of revenues and the importance of monetary stability” as reasons.

How will the stimulus be funded? According to the government it plans to fund the stimulus from three major sources;

Firstly, it claims it will raise N500 billion from Special Accounts. Special Accounts are government accounts approved by the National Assembly where monies are accrued from tax deductions, oil proceeds, or any other source as provided in the law. Examples are the Ecological Funds, Education Trust Fund, Universal Basic Education Fund, etc.

Secondly, it proposes to raise about N1.1 trillion from what it termed “CBN Structured Lending” which suggests more intervention loans from the CBN. It could also include restructuring existing intervention loans by offering moratorium and lower interest rates which were also captured in the report.

The balance of N334 billion and N302.9 billion respectively will come from “external bilateral/multilateral sources – N334billion and other funding sources – N302.9bn.” These are basically loans and grants from monetary development institutions and rich donor countries.

Upshots

The government has not confirmed if the recommendations included in this report will be adopted. However, several pronouncements from the government indicate this is the direction they plan to follow.

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Naija News

#EndSARS: Governor Oyetola suspends curfew in Osun

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#EndSARS

The governor of Osun State, Gboyega Oyetola, has suspended the 24-hour curfew he imposed on the state to tackle the rising violence and damages caused by hoodlums under the #EndSARS protests.

Mr Oyetola in a statement by the secretary of the state government, Wole Oyebamiji, noted the high level of compliance with the 24-hour curfew he had declared to forestall breakdown of law and order.

He said after a review and setting up of a panel of inquiry, the governor decided to lift the curfew.

On the MoU, “The state government has further approved henceforth 100% payment of monthly pensions for retirees earning N30,000 and below while other retirees not in the said category shall be paid 75% of their monthly pensions.

“After reviewing the situation of the last 48 hours and following the inauguration of the State’s Judicial Panel of Inquiry on Police Brutality, the Governor, Mr. Adegboyega Oyetola, hereby suspends the 24-hour curfew, effective from today, Friday, October 23, 2020 till further notice.

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Crime Watch

ATTACK ON AKBC and FACILITIES IN UYO ( Watch Video)

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The Nigeria Union of Journalists, Akwa Ibom State Council, condemns in the strongest terms the destruction on the Akwa Ibom Broadcasting Corporation, Administrative Building located along Udo Udoma Avenue, Uyo and other facilities within the metropolis by hoodlums masquerading as #ENDSARS protesters.

These attacks are uncalled for and meaningless. Certainly, this is not the way to go. It is a classic case of blaming the doctor for the disease of the victim.

We urge security agencies to be on top of the situation to prevent further wanton destruction of lives and property and also ensure that perpetrators of these dastardly acts are brought to book in accordance with the laws of our State.

The Union further commends His Excellency, Governor Udom Emmanuel for the swift response to the ugly development by imposing a curfew in the State to control the situation.

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Naija News

#EndSARS: Super Eagles may boycott AFCON qualifiers

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Super Eagles

There are strong indications that some Super Eagles stars may boycott next month’s 2021 Africa Cup of Nation double-header against Sierra Leone over safety concerns.

#EndSARS protests against police brutality and extrajudicial killings have rocked the country in the last two weeks, with the military and police killing peaceful protesters.

On Tuesday, eyewitnesses claim about seven lives were lost, with several others injured when soldiers opened fire on protesters in a bid to disperse them from the Lekki toll gate in Lagos — a focal demonstration ground for the #EndSARS campaign.

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Our correspondent gathered that the overseas-based players were afraid of returning to Nigeria for Eagles games, for fear of being killed or maimed.

Super Eagles midfielder John Ogu wrote on Twitter, “The Politicians should ask their children to represent Nigeria in the next @NGSuperEagles @thenff upcoming games. I’m so devastated like right now.”

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Nigerian Economy Losses N700Bn to EndSars Protest – LCCI

Southern Kaduna Killings – Nigeria Army Have Limited Manpower

“We can’t be representing a country that kills our brothers and sisters. This killings and unrest must stop or we stay away,” another player based in Belgium said.

Leicester City and Super Eagles’ forward, Kelechi Iheanacho posted a cryptic message on Twitter with a broken heart emoji to express his dismay at the recent killings.

“God is watching. It will end in praise. We will keep speaking up,” he wrote.

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COVID-19 PREVENTION

infectious diseases in your community. It is very important to wash your hand frequently with soap under running water.

COVID-19 IS REAL

#COVID19NIGERIA Situation Report

The #COVID19Nigeria situation report for 21st July, 2020 has been published. Our daily reports provide a summary of the epidemiological situation & response activities in Nigeria

The #COVID19Nigeria situation report for 21st July, 2020 has been published. Our daily reports provide a summary of the epidemiological situation & response activities in Nigeria

@Africa CDC

The African Union and Africa CDC will virtually rollout the Partnership to Accelerate COVID-19 Testing (PACT) in Africa tomorrow 4 June, 2020 at 11.00 am Eastern Africa Time.

The African Union and Africa CDC will virtually rollout the Partnership to Accelerate COVID-19 Testing (PACT) in Africa tomorrow 4 June, 2020 at 11.00 am Eastern Africa Time.

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"Also found worthy of honour was Bashir Abubakar, an Asst Comptroller-General of Customs, who rejected a bribe of $412,000 per container offered him by drug traffickers seeking to bring 40 containers of Tramadol into Nigeria. A fine example of incorruptibility, worthy of emulation"

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