The World Bank is ready to grant immediate relief package of $1.5billion for Nigerian State Governments to mitigate the effect of the Covid-19 pandemic, the National Economic Council (NEC) said on Thursday.
Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, who announced this to newsmen at the end of today’s NEC meeting chaired by Vice-President Yemi Osinbajo, also warnes of serious consequences for the Nigerian economy, which she said would affect the poor more.
Speaking on the World Bank’s projections on Nigeria, the Minister revealed that government had discussions with the Bank as the
World Bank Country Director was invited into NEC meeting where he
spoke in respect of their assessment of the impact of Covid-19 on the economy and also their review of the measures that government has taken.
She pointed out that these measures include the N500billion that President Muhammadu Buhari has approved to support healthcare facilities and provide relief to tax payers as well as incentives that will be provided for employers to retain and recruit staff during the lockdown period.
Ahmed stated that the World Bank view is that the impact of the Covid-19 on Nigeria will lead to severe amplified human and economic cost, which will move the country into a recession.
She said the Bank has therefore proposed a package of immediate relief for the federal government as well as $1.5billion for states.
“The World Bank planned a proposed package for immediate fiscal relief for the federal government. This will also involve policy-based policy budget support for the FG, focusing on measures to maintain macro financial stability and create fiscal space for proposed stimulus.
“The World Bank package has also got a proposal of $1.5billion for the states and this package will be dedicated to the states. And it will be a programme for results which the states are already used to implementing.
“So, the immediate fiscal relief for the states, as stated in the presentation, will include the acceleration of an existing programme to enable disbursement by end of September.
“So, the proposed $1.5billion plan will by end of September it would have been disbursed to the states.
“We are looking at an average of between N150billion to N200billion based on the plan to the 36 states.
“These are states that have already made some particular commitments and achievements so that they will be able to get immediate disbursements of parts of these funds.
“It is not news any more that these are very difficult and challenging times. We are facing a very significant economic downturn; a time that we have not seen in the history of our country.
“The global economy is also facing the sharpest reversals since the great depression and this has both health as well as economic consequences”, she explained.
She noted that the influx into the Federation Account for the first quarter of 2020 was N940.91billion, indicating a shortfall of 31%; while the country’s Gross Domestic Products (GDP) can shrink by as much as –8.94% in 202 in the worst case scenario if there are no fiscal stimulus.
“This represented a shortfall of N125. 52billion or 31% of the prorated amount that is supposed to have been realized by the end of that first quarter.
“40% of the population in Nigeria, today, are classified as poor. The crisis will only multiply this misery. The economic growth in Nigeria, that is the GDP, could in the worst case scenario, contract by as much as –8.94% in 2020.
“But in the best case, which is the case we are working on, it could be a contraction of –4.4%, if there is no fiscal stimulus. But with the fiscal stimulus plan that we are working on, this contraction can be mitigated and we might end up with a negative –0.59%”, Ahmed pointed out.
The Minister explained that it is because of this that the federal government set up the Presidential Economic Sustainability Committee in addition the Presidential Task Force on Covid-19 as well as the Crisis Management Committee, which she chairs.
“The Economic Sustainability Committee is responsible for providing overall strategic vision, policy direction and general oversight of the implementation amongst others”, she said.
Ahmed further revealed that the Excess Crude Account, has a balance at of US$72.04million as at 21st of May, 2020; Stabilization Account, N39.337billion and Natural Resource Development Fund Account, N125.19billion.
In his remark, Governor of Jigawa state, Mohammed Badaru, revealed that NEC set up a committee to work with the Presidential Task Force on Covid-19 on the modalities for the reopening of the Nigerian economy.
He also said that NEC was told that Nigeria has not reported any case of polio for 43 months, meaning that the country will soon eliminate the virus.
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