Nigeria Officially In Recession But Taxes Will Turn It Around, Finance Minister Says
Nigeria is officially in recession but it won’t last long, Nigerian Finance Minister Kemi Adeosun said Thursday during a Senate briefing, This Day reported.
Nigeria will emerge stronger from government spending cuts and programs put in place to address the downturn, Adeosun said — programs such as the total removal of fuel subsidies.
Petroleum products in Nigeria are now market driven, and removing subsidies has paved the way for healthy competition among oil marketers, Adeosun said.
When petroleum was subsidized, Nigerians consumed 45 million liters of petrol a day, but consumption has now dropped to 26 million litres a day.
“All the smuggling that was going out of the country based on the subsidy that we were providing has stopped,” Adeosun said. “Those are real savings to the economy which we are now redirecting into essential infrastructure that will get this economy going.”
“Is Nigeria in recession? If you go into two quarters of negative growth, technically, we are in recession but I don’t think we should dwell on definitions,” Adeosun said, according to This Day. “We should really dwell on where we are going. I think if we are in a recession … we will begin to turn the corner by the third quarter.”
Africa’s largest economy is struggling with low oil prices, foreign currency shortage, rising inflation, falling state revenue, and weakened consumer confidence, Financial Times reported.
The International Monetary Fund forecast on Tuesday that Nigeria will slide go into recession this year for the first time in more than 20 years.
Adeosun said she’s not too worried about IMF projections and told Nigerian senators to ignore some of them, This Day reported.
The minister also told the senators to ignore the recent projections from the International Monetary Fund (IMF) that the Nigerian economy would be vulnerable to global shocks.
The Nigerian economy will weather the current economic crisis, Adeosun said.
“I am not too worried about IMF projections,” she said. “One of its functions is global economic surveillance. They equally issued a negative report on Britain as a result of Brexit … I don’t think we should panic every time IMF speaks. I think we need to be confident about what we are doing and where we are going. I remain extremely confident.”
The IMF projected that Nigeria may continue to go into negative territory.
“I am not sure what we have seen suggests that,” Adeosun said. “Agricultural output seems to be going up… That tells you that things are moving in the right direction.”
Nigeria’s consumer price index, which is used to measure inflation in the country, recently hit 16.5 percent, the highest in 11 years, according to the country’s statistics office, Premium Times reported.
The IMF said cut the country’s GDP growth forecast from 2.3 percent in April to 1.8 percent, the lowest in 29 years.
The government has stopped funding nonessential items, Adeosun said. However there is no risk to federal government employees’ salaries, This Day reported.
“We have paid all salaries, the federal government has always paid its salaries, and there is no risk whatsoever that there is going to be a situation where government will not pay salaries,” said Udoma Udo Udoma, Nigeria’s Minister of Budget and National Planning.
The economy will start to grow by the end of the third quarter, Nigerian officials said.
“Much of our revenue will come in quarter three of the year … Most companies end their year in December. So it is from September they will begin to pay their taxes,” she said.