Nigeria’s finance minister says economy could shrink by 8.9%

Nigeria’s economy could shrink as much as 8.9 percent in 2020 in a worst-case scenario without stimulus, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said on Thursday.

That would be a deeper recession than forecast after oil prices plunged due to the coronavirus pandemic, according to Reuters.

Ahmed told Nigeria’s highest economic advisory body, the National Economic Council, that the contraction could reach 4.4 percent in a best-case scenario, without any fiscal measures.

But with stimulus, the contraction could be kept to just 0.59 per cent, she said.

The pandemic and an oil price plunge have not only hit growth but also dented the country’s main source of income, creating large financing needs and weakening the naira.

“We will go into recession – but what we are trying to do is to make sure that it is shallow so that we will quickly come out of it, come 2021,” Ahmed told the council in a virtual meeting.

According to her, 40 percent of Nigerians are poor and the crisis will increase poverty.

Ahmed said Nigeria had over 6,000 confirmed cases of the novel coronavirus, but that this could rise to almost 300,000 by the end of August. So far, 200 people are confirmed to have died with the virus.

A World Bank director taking part in the meeting said the bank was planning a package for immediate fiscal relief for Nigeria.

Ahmed said the proposal was worth $1.5 billion and intended for Nigeria’s states to provide relief at sub-national level. She said it could be disbursed by September.

Nigeria’s first quarter revenue from crude sales was N940.9 billion ($2.6 billion), missing its target by 31 percent due to the oil price crash, she said.

According to Ahmed, Nigeria has $72.04 million in its oil savings account as of May 21, compared to $325 million in November.