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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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COVID-19

NCDC – 626 New Cases of Coronavirus Confirmed In Nigeria

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NCDC New Cases of Coronavirus

NCDC – 626 New Cases of Coronavirus Confirmed In Nigeria

Nigeria on Thursday, July 2, recorded 626 new cases of Coronavirus as confirmed in a tweet shared by the Nigeria Centre for Disease Control (NCDC). 

 

A breakdown of the new cases across different states in the country is as follows; Lagos-193, FCT-85, Oyo-41, Edo-38, Kwara-34, Abia-31, Ogun-29, Ondo-28, Rivers-26, Osun-21, Akwa Ibom-18, Delta-18, Enugu-15, Kaduna-13, Plateau-11, Borno-8, Bauchi-7, Adamawa-5, Gombe-4, Sokoto-1.

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As at July 2, there are 27,110 confirmed cases of Coronavirus in the country. 10,801 patients have been discharged and 616 deaths has been recorded.

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193 Almajiria Test Positive For COVID-19 In Kano State

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Kano State Almajiria Test Positive For COVID-19

193 Almajiria Test Positive For COVID-19 In Kano State

A total of 193 Almajiris in Kano State have so far tested positive to COVID 19, according to the Kano state government.

Speaking at the COVID-19 press briefing held, Thursday, July 2, Kano State Commissioner of Education, Sanusi Mohammed Kiru disclosed that a total of 1860 persons were quarantined in three locations in the state, out of which 193 of them tested positive.

 

Sanusi who is also the head of the state government’s committee on the rehabilitation of almajiris, explained that 86 of them tested positive at Gabasawa Quarantine camp, 68 tested positive in Karaye while 38 tested positive in Kiru.

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He expressed happiness at the initiative to isolate the almajiris in the state, adding that state efforts at tackling the dreaded disease would have been worse off if they were allowed to continue to spread the disease in these communities.

 

He recalled that so far the state has repatriated a total of 1183 Almajirs to the rest of the states in the region such as Jigawa, Kaduna, Katsina, Gombe, Bauchi, Kebbi, and Zamfara States in line with the decision of the Northern Governors forum to end street begging in the region.

 

He further disclosed that the state government had established three almajiri boarding schools for the immediate admission of the Almajiris of Kano State orIgin, saying that these schools are located in Bunkure, Bagwai and Madobi Local Government Areas.

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President Buhari Suspends NSITF Boss, Others

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NSITF Boss Buhari

President Buhari Suspends NSITF Boss, Others

President Muhammadu Buhari has approved the immediate and indefinite suspension from Office of the Managing Director/Chief Executive of the Nigeria Social Insurance Trust Fund (NSITF), Mr Adebayo Somefun.

Sen Chris Ngige, Minister of Labour and Employment, in a statement by Charles Akpan of the Press and Public Relations in the ministry, named other officers suspended to include Jasper Ikedi-Azuatalam, Executive Director (ED), Finance and Investment, and Mrs Olukemi Nelson, ED, Operations.

Also suspended are Alhaji Tijani Darazo Sulaiman, ED, Administration, Mr Olusegun Olumide-Bashorun, General Manager, Administration/Human Resources/Maintenance, and Mr Lawan Tahir, General Manager, Finance.

Others asked to go are Mr Chris Esedebe, General Manager, Claims and Compensation, Mr Olodotun Adegbite, Deputy General Manager, Investment and Treasury Management, and Mr Emmanuel Enyinnaya-Sike, Deputy General Manager, Finance and Accounts.

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The statement also named Mrs Olutoyin Arokoyo, Deputy General Manager/Acting Head, Legal, Ms. Dorathy Zajeme-Tukura, Deputy General Manager, Administration, and Mrs Victoria Ayantuga, Assistant General Manager, Internal Audit.

The minister said that their suspension from office arose from the “preliminarily established prima facie infractions on the extant Financial Regulations and Procurement Act, and other acts of gross misconduct”.

“During the period of their suspension, the officers will face a Joint Board and Audit Investigative Panel that had been set up to look into the financial and procurement breaches, as well as gross misconduct in the NSITF from 2016 to date.

“The gross misconduct has invariably put the contributions of stakeholders in a perilous state. The affected officers have also been directed to hand over to the most senior officers in their respective departments,” the statement said.

It quoted Ngige as specifically directing that Dr Kelly Nwagha, General Manager. Health, Safety and Environment Department, to assume the position of Managing Director/Chief Executive Officer, being the most senior General Manager in the organisation.

It said that officers assuming the new positions would take charge from Monday, July 6, 2020, until further notice.

Ngige charged the Chairman of the Board, Mr Austin Enajemo Isire, to ensure that the investigative panel commenced work as soon as possible.

He also charged him to ensure that the Board facilitated the smooth running of the Fund by creating the enabling environment and all the necessary staff adjustments and movements, in order to guarantee that services by staff to the contributors were not affected.

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#COVID19NIGERIA Situation Report

http://news.ncbn.ng/2020/06/04/coronavirus-and-the-adversity-of-the-asymptomatic-bala-ibrahim/

@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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Gallant Officer
"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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