Ndubuisi Orji, Abuja
The Minister of Finance, Zainab Ahmed, has said the 2021-2023 Medium Term Expenditure Framework (MTEF)/Fiscal Strategy Paper (FSP) was prepared against the backdrop of a global recession and heightened economic uncertainty.
Ahmed stated this in her presentation at a five-day interactive session organised by the House of Representatives Committee on Finance on the 2021-2023 MTEF /FSP. Represented by the Minister of State for Finance, Clement Agba, the ministernoted that “ the draft 2021-2023 Medium Term Fiscal Framework shows that there are continuing global challenges due to the COVID -19 pandemic. The medium-term outlook for Nigeria suggests that fiscal risks are somewhat elevated, largely due to COVID -19 related disruptions, which has exacerbated structural weaknesses in the economy.
Nigeria faces significant medium-term fiscal challenges, especially with respect to its revenue, which if not addressed could snowball into a debt sustainability crisis. “ She explained that government was putting in place measures to manage the country’s fiscal crisis, adding that the measures were geared towards improving the nation’s revenue and entrenching “a regime of prudence with emphasis on achieving value for money”.
“The goal of fiscal interventions will be to keep the economy active through carefully calibrated regulatory policy measures designed to boost domestic value-addition, de-risking the enterprise environment, attract external investment and sources of funding, among others impeartives” Ahmed added. The minister further stated that “ to enhance independent revenue generation and collection, the government would aim to optimise the potential, operational and collection efficiency of GOEs with a view to generating significantly higher revenues required to fund government’s budget”.
While speaking on the key assumption and macro-framework of the MTEF/FSP, Ahmed said the oil GDP is expected to “ contract by 12.96 percent in 2020, year on year, causing an economy-wide drag that would result in slower growth in non-oil GDP by 3.6 per cent, year on year”, with “real GDP is expected to decline by 4.2 percent this year.”
She also disclosed that nominal GDP is expected to increase from N130.836billion in 2020 to N132.125billio n in 2021 and then up to N138.415billion in 2023, adding that “similarly, consumption expenditure is projected to stay flat at N118.735billion in 2020 and N118.468billion in 2021 and grow to N124.358billion 2023, reflecting a gradual steadiness in the recovery.”
According to her, “with oil price projected to remain low and volatile in 2020, and Nigeria’s compliance with the OPEC cuts by reducing base production to between 1.412mbpd and 1.579mbpd from June to end of the year, growth in oil GDP is expected to decline in 2020.
“Although, Nigeria’s total production capacity is 2.5mbpd, current crude production is about 1.4mbpd (in compliance with the OPEC production quota), and an additional 300,000bpd of condensate, totalling about 1.7mbpd. “World Bank forecats that crude oil prices will rise gradually from an average of Us$42pb in 2021 to $44.5pb in 2022, and Ud47pb in 2023”. “EIA expects crude oil prices to average $41pb during the second half of 2020 and $50pb during 2021, reaching $53pb by the end of 2021.”