SOURCE: VANGUARD
MINISTER of Finance, Mrs. Kemi Adeosun, yesterday, painted a
gloomy picture of the economy when she appeared before the Senate, saying the
country was already in recession.
This came as Minister of Budget and National Planning,
Senator Udo Udoma, gave a ray of hope on the current economic quagmire, noting
that there were strong indications that the economy would rebound from later
this year to early next year.
Adeosun briefed the Senate on the state of the economy and
issues relating to the implementation of 2016 budget, as well as the Monetary/
Fiscal Policies adopted to salvage the present economic situation.
She also said President Muhammadu Buhari’s government
inherited what she described as negative reserves and salary and wage bill of
N165 billion. Kemi Adeosun The Minister equally told the senators that so far,
the government had released capital votes of N247.9 billion, with plans to
release an additional N60 billion very soon, even as she disclosed that the
Federal Government had released N74 billion to Ministry of Works in the last
two months, compared to N19 billion the ministry received for the whole of
2015.
She said:
“Technically, in economic terms, if you have two periods of negative
growth, you are technically in a recession. But I don’t think we should spend
too much time on that, we are in a tough place. “Whether you call it recession
or not, we are in a tough place, but the most important thing is that we are
going to get out of it.
Technically, we are in a recession, but I don’t think we should
dwell on definitions, I think we should really dwell on where we are going.
“Everything we are doing is moving outside of it, our social intervention
programmes have been funded, those of providing reliefs to the very poorest,
right down to every single local government would be touched by that programme.
“We have started and we will continue with it....
We are not the only country in recession, many countries are
doing far worse than us. But for Nigeria, what Nigerians want to know is ‘how
is that going to affect me and I want to assure everybody that what we are
doing is going to work and it is going to turn this economy around.” She said
government had released N21.9 billion to the Agriculture Ministry, compared to
the N4 billion the ministry got last year, adding that transport got N22
billion, compared to the N6 billion it received last year.
On whether the releases were backed by cash, the Minister
said: “The releases are fully
cash-backed. We have stopped the practice of releasing or approving releases
that are not cash backed. We have changed that process; we now start from the
position of how much cash do we have and then we release appropriately.
So, all releases are cash-backed. “We predicated the budget
on N197 and the rate is now N280. The impact will be on the revenues because
when the actual comes in at N280, what will simply happen is that the revenues
in nominal terms will increase and that will flow through into the revenue
performance.
“What will happen is that the amount of the deficit will go
down because the revenue will convert dollars to naira and will give more naira
into nominal terms, so that will be the impact. “I think at a time like this,
blaming who was responsible doesn’t actually take us anywhere but I will tell
you what I inherited.
I inherited very little by way of reserves, I inherited
significant debt, contractor debt, cash calls of $5 billion outstanding to the
oil companies. “I mentioned the cash calls of $5 billion outstanding to the oil companies, I equally
mentioned the fact that many of the contractors, even though we have paid them
N107 billion, find it very difficult to work because they are owed and some of
them have not been paid since 2012.
“Their
claims are over N390 billion.
So, I didn’t inherit reserves that are
positive. I inherited reserves that tend
to be more negative than positive because the economy is actually in very good
hands and we are doing absolutely our best to get through this difficult
period. “I explained how we are doing that, we have been extremely disciplined
around our spending, we are investing in essential infrastructure......
We have released N74 billion to Works in two months, compared
to N19 billion for the whole of last year. “We are doing everything possible to
avert and to manage the situation which we didn’t create unfortunately, but
which we inherited and we as a nation, must all get out of.
” The Finance Minister, who expressed optimism that Nigeria
would get out of the recession, since it was not the only country experiencing
this at the moment, said: “ I think if
we are in recession, what I will like to say is we are going to come out of it
and it would be a very short one.
“This is because the
policies that we have would ensure that we don’t go below where we need to go
and I think with what we are doing, we would begin to turn the corner I believe
by third quarter. “I can confirm that there is no more subsidy, it is a
market-driven price and, indeed, one of the good things that we are now seeing
is that prices have actually come down.
There is now competition among filling stations for market
share, which is a good thing. It means
that overtime, the market would continue to correct itself.” Answering
questions on the recent statement by the International Monetary Fund on the
nation’s economy, the Finance Minister noted that the government was not
disturbed over such remarks. She said:
“I am not too worried about the IMF projection, I will tell
you why, because one of the functions of the IMF is global economic
surveillance. They equally issued a negative report on Britain as a result of
Brexit. I don’t think we should panic every time IMF speaks. “I think we need
to be confident around what we are doing and where we are going.
I remain extremely confident, as I said around Nigeria, IMF
has given their projections which is, we may continue into negative territory
and I am not sure what we have seen suggests that. Agriculture output seems to
be going up. If you even look at inflation, which is very high, the one for
this month reduced and that tells you that things are moving in the right
direction.
“If
you look at what is happening in the petroleum sector before subsidy, we were
subsidising around 45 million litres of fuel a day. Now without subsidy, usage
has dropped to 26 million litres so what does that tell you?”....
Budget 2016 On the projected implementation of 2016 budget,
the Finance Minister said: “The
projected rate of implementation of the budget, I found out that is the
difficult question to answer simply because there are quite a few moving parts
in terms of our revenue and many of our revenues will come in quarter three.
“For example, most companies’ year end is December, so it is
from September that they begin to pay their taxes for the year. So I think I
have a clearer picture a little bit and if you don’t mind, we could defer
giving us specific projections. “But I am very confident that we will do very
well, at least, we will do over 60 per cent, based on projections, but I think
that our revenues will be better if the economy sustains its trajectory.
“What are areas of priority, I think we have been fairly
consistent that we needed to invest in infrastructure and in our releases, we
have tried to prioritize those areas and also to work with seasonality.
“For example, Works Ministry needs to have their money during
the dry season because during the rainy season, works stop and we are trying to
execute the releases to ensure maximum impact.” Asked by the Senate on when the
2017 budget would be ready, Adeosun said:
“On the 2017 budget, I believe the Minister of Budget and
Planning has started working on putting that document together. “The question
about the interest of Nigerians, I think it is a very good one.
Job creation and reserves. One of the things that I mentioned
that we have done is release this money for the first time for the social
intervention programmes. “We have released N15 billion of capital and we put in
N5 billion this month for recurrent and so that recurrent will continue to
increase as they roll out the implementation of things like duty calls,
agriculture extension workers and other job creation initiatives....
On borrowing, the Minister noted that the government was
borrowing locally, with plans to go international later. “We have been
borrowing largely from the domestic market because we needed to get the
exchange rate sorted out to enable us borrow from the international market.
“International borrowings will begin to come in quarter
three, that is always our projection. We
would take initial money from Nigeria as we sort things out and we go on the
road to borrow internationally.
” We’ll come out of it— Udo Udoma Udoma who fielded questions
from Journalists, in company of Taraba State governor, Mr. Darius Ishaku, and
his Niger State counterpart, Abubakar Bello
at the end of National Economic Council chaired by Vice President Yemi
Osinbajo at the presidential villa, Abuja, yesterday, also confirmed the
Finance Minister’s declaration that the economy was in recession.
He acknowledged that 2016 had been bad for the economy, due
mainly to the restiveness in the Niger Delta, which had led to blowing up of
oil and gas pipelines by militants. He, however, said the federal government
was working assiduously to diversify the economy by developing other sectors
such as agriculture and solid minerals.
The minister also dismissed speculations that the federal
government was owing workers salaries at the federal level.
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