The federal government wednesday allayed fears of an economic crisis in view of the effects of the crash in global oil prices and the Coronavirus epidemic on the nation’s economy.
Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, called on Nigerians not to panic as the drastic fall in global oil price threatens the country’s 2020 budget as well as its macroeconomic stability.
She gave the assurance just as the Central Bank of Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, said the CBN had already embarked on measures to significantly reduce lending rates, which have resulted in total banking credit rising to over N17.4 trillion as of January.
Also, the Group Managing Director, Nigeria National Petroleum Corporation (NNPC), Mallam Mele Kyari, has expressed the corporation’s readiness to strategically put in place measures that would reduce the cost of crude oil production in Nigeria to create a market for Nigeria’s crude and make the country a choice destination for Foreign Direct Investment (FDI).
He, however, said the country should plan for the possibility of a further drop in crude oil price, saying “we haven’t seen the bottom yet.”
They all spoke at the, “Going for Growth 2.0,” organised in Abuja yesterday, which also saw presentations from the Minister of Transportation, Mr. Rotimi Amaechi; his counterpart from the Works and Housing Ministry, Mr. Babatunde Fashola, as well as many leading private sector operators.
The benchmark Brent crude slid to $36.09 per barrel yesterday, slightly lower than the $37 per barrel it closed the previous day.
According to Ahmed, Nigerians must adjust to life beyond oil, following the bleak outlook on the global economy occasioned by the Coronavirus outbreak.
She said there was no doubt that the combination of crude oil price crash and Coronavirus epidemic would put severe strain on revenue, foreign exchange and other sectors of the economy.
The minister said the current economic challenges arising from the dramatic drop in oil price came as a huge surprise to the government.
She called on stakeholders to work together and seize the opportunities provided by the crisis to reset the economy.
She said the government would need to resort to measures which were hitherto delayed, adding that this is the right time to act.
Ahmed explained: “For us it was a shock and unexpected; we didn’t think the price of oil would go as low as $30 per barrel. So, it came to us as a great surprise. These are very strong headwinds and these headwinds reinforce a wake-up call for us as a country to look towards a life without oil and the time to do that is now.
“But for all of us in this room, we have a responsibility to ensure that we do not spread panic and that we don’t allow speculation, which will not be in favour of our country. We need to put our hands together to weather this storm.
“This is not something that the government can do alone nor is it something that the private sector can do alone; it has to be a partnership- a very strong one. We need to work together to take the opportunities that this same crisis has provided for us.
“For us in government, there are some measures that we need to take which we have not taken and this is the right time to take those measures.
“We are working as a government to strengthen our macroeconomic fundamentals, which some sectors of the economy were already dished before the crisis and so the crisis is only exacerbating the situation and we knew about that.
“There is no doubt that the combination of crude oil price crash and Coronavirus will put severe strain on our budget revenue, forex and many sectors, we are drastically reviewing the budget as well as redoubling our efforts to raise revenue and plug the leakages and intensify engagement and support of sub-national entities and the private sector in our economic recovery and growth programmes.”
