Despite the country’s Gross Domestic Product (GDP) contraction by -6.10 per cent in the second quarter of 2020, the Federal Government says it will continue funding the 2020 budget to ensure that the economy recovers as projected.
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, disclosed that in spite of the recent oil and non-oil revenue challenges that led to the revision of the 2020 budget, the government remains committed to fully funding the 2020 Amendment Budget as well as the economic sustainability plan (ESP), to accelerate the fiscal responses to the deteriorating economic situation nationwide, Daily Times gathered.
Recall that in the recent GDP report by the National Bureau of Statistics (NBS), both oil and non-oil sectors of the economy recorded negative growths in the second quarter of the year, a situation many financial analysts believe does not look good for the country.
However, Ahmed stated that “Federal Ministry of Finance, Budget and National Planning is releasing the 2020 capital budget vote to ministries, department and agencies (MDAs) based on their approved Economic Sustainability and implementation plans.
Specifically, the Ministry has already released capital votes for all federal MDAs at a minimum of 50 per cent and is in the process of releasing targeted funds to cashback priority capital projects.
“Under the enhanced fiscal management framework, optimal treasury operations, as stated, would be key to ensure that timesensitive expenditures are prioritised over less critical spend; cash management is enhanced to accelerate the conversion of liquidity into the achievement of optimal outputs and outcomes; and financial controls are strengthened to detect and eliminate instances of waste, funds misappropriation and corruption.”
Speaking further, the minister disclosed that the Federal Government is also supporting states to contain the health and economic challenges arising from the COVID-19 pandemic as well as the decline in oil revenues due to price and production challenges.
The government is implementing an enhanced consequence management framework to assess the impact of current spending by MDAs as well as to inform future allocations to MDAs. A suite of sanctions is being finalised to enforce this consequence management Framework, she said.
Ahmed further stressed that the government’s anticipation of the impending economic slowdown which it had communicated to the public much earlier and accordingly the various initiatives it introduced early as a response to cushion the economic and social effects of the pandemic may have contributed to dampening the severity of the pandemic on growth.
On the fiscal side, she alluded to a robust financing mechanism being designed to raise revenue to support humanitarian assistance, in addition to special intervention funds for the health sector.
Additionally, she stated that adjustments to the national budget as well as emergency financing from the concessional lending windows of development finance institutions were critical in supporting the government’s capacity to meet its obligations.
On the monetary side, a moratorium on loans, credit support to households and industries, regulatory forbearance and targeted lending and guarantee programmes through NIRSAL were some of the measures implemented in response to the pandemic during the second quarter.
She added that “Considering complementary monetary policy and real sector interventions, the Central Bank of Nigeria (CBN) is intervening with a suite of monetary policy interventions to complement the aforementioned fiscal policy reforms such as; Diagnostic testing and laboratory research efforts; reducing the interest rate on CBN intervention facilities from nine per cent to five per cent with a 1-year moratorium, creating N50 billion targeted credit facility and injecting N3.6trillion into the banking sector; and expansion of the government’s social investment programme.”