By Etuka Sunday
The Minister of Finance, Mrs. Zainab Shamsuna Ahmed yesterday said that the Federal Government was working to review the impact of the Coronavirus and the new low regime of global crude oil prices on the national budget and the various sectors of the economy.
Mrs Ahmed made this known at the Central Bank of Nigeria (CBN) Round Table discussion, held at the bank’s Headquarters in Abuja.
She said, “There is no doubt that the contribution of the crude oil price crash and the Coronavirus has put a very significant seal on the national budget.
“The Black Monday was a shock to us. We will review the impact on the national budget and the various sectors of the economy and provide recommendations on how we can raise revenue from non-oil sector, plug leakages. We will find a way in spite of the dwindling revenue to increase spending in critical sector of the economy,” she said.
Meanwhile, the CBN’s Governor, Mr. Godwin Emefiele and the richest black man in the world, Aliko Dangote have called for the diversification of the nation’s economy, adding that reliance on crude oil was unsustainable.
Emefiele said, “notwithstanding our current measures aimed at supporting growth, our economy faces considerable challenges. GDP growth remains below our annual population growth rate at 2.6 percent.
Second, our reliance on crude oil for more than 80 percent of our foreign exchange earnings and sixty percent of government revenues means our economy is exposed to the impact of the corona virus on crude oil prices.
“Projected declines in revenues as occasioned by the drop-in crude oil prices constraints the government’s ability to meet its infrastructure commitments in 2020, which is vital if we are to achieve double digit growth.
“Given this challenge, it is imperative that this roundtable session comes up with well-structured funding models, that will mobilize funds from banks and other financial institutions to fund critical infrastructure projects, while providing attractive returns to investors.
“Indeed, the current oil price shock validates some of the measures taken by the fiscal and monetary authorities on diversification of the Nigerian economy. These measures, which have focused on improving domestic production of goods and services, particularly in the agriculture and manufacturing sectors, are necessary if we are to insulate our economy from volatilities in the crude oil market. We must build on the successes of these measures and reduce our dependence on excessive imports,” he said.
On his part, Dangote said, since 1969, people have been talking about diversification, however, how to diversify the economy is through agriculture and manufacturing. He said, manufacturing creates a lot of jobs and transforms countries.
Earlier, the Group Managing Director of the NNPC, Mallam Mele Kyari said, at the moment the cost of crude oil production in the country was within the range of $15 to $17 per barrel, adding that some leaders in the Industry such as Saudi Arabia’s cost of production is between $4 and $5 per barrel.
“Today, I can share with you that there are over 12 stranded LNG cargoes in the market globally. It has never happened before. LNG cargoes that are stranded with no hope of being purchased because there is abrupt collapse in demand associated with the outbreak of coronavirus,” Mallam Kyari submitted.
He said that in the face of the Coronavirus global pandemic, countries like Saudi Arabia have given discount of $8 and Iraq $5 to their off-takers in some locations meaning that when crude oil sells at $30 per barrel, countries like Saudi Arabia is selling at $22 per barrel and Iraq selling their crude at $25 per barrel.
The GMD said the NNPC was working round the clock to increase the countries daily production to 3million barrels per day and shore up the crude oil reserves to 40billion barrels.
Mallam Kyari called on government at all levels, captains of Industries and the organized private sectors to brace up for the new low regime of global crude oil prices, adding that realistic estimates must be made to reflect the current realities of the crude oil market.
The roundtable discussion also has the Minister of Works and Housing, the Minister of Transportation, the Minister of Industry, Trade and Investment in attendance. Coronavirus pandemic: Nigeria to review impact on National Budget