The Minister of Finance, Kemi Adeosun, has confirmed that the Nigerian economy is in recession.
Speaking with Senators on the state of the economy, Adeosun projected that the economy will however grow further. Even as she added that Nigeria, despite the recession, is still the largest economy in Africa.
She faulted the IMF’s position that the Nigerian economy will contract further.
Adeosun said, “Is Nigeria in recession? Technically. If you go into two quarters of negative growth, technically, we are in recession. But I don’t think we should dwell on definitions. I think we should really dwell on where we are going. 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 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 Quarter Three.”
“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’s that going to affect me’ and I want to assure everybody that what we are doing is going to work and it’s going to turn this economy around.”
She insisted that despite the recession Nigeria’s economy was still the largest in Africa.
Speaking on the IMF projection that the economy will fall further, Adeosun said, “I am not too worried about the IMF projection. I will tell you why because IMF job and function 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. ”
The finance minister noted, “I inherited very little by way of reserves.
“I inherited significant debt, contractor debt. Cash calls of $5 billion dollars outstanding to the oil companies.
“I mentioned the cash calls of $5 billion dollars 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 and 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 we must all get out of.”
Speaking on the loans the Federal Government is taking, she said, “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,: she said, adding:
“The international borrowings will begin to come in quarter three; that is always our projection. We would take initial money from Nigeria as we sorted things out and we go on the road to borrow internationally.”
“The projected rate of implementation of the budget I found that difficult question to answer simply because there are quite a few moving part in terms of our revenue and many of our revenues will come in Quarter Three.
On what should be done first, she said, “I think we have been fairly consistent that we needed to invest in infrastructure and in our releases we have tried to prioritise 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 work stops and we are trying to time the releases to ensure maximum impact.”
She noted that the 2017 budget was already in the oven, “I believe the minister of Budget and Planning has started working on putting that document together and I am very sure in good time for us to go back to the calendar that we like, which is the December calendar.
”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 how much cash do we have and then we release appropriately.”
On social intervention schemes, the minister said “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 the duty calls, the agriculture extension workers and the other job creation initiatives.
“Also beyond that, the police. One of the upside from the cleaning we have done on the pay roll was that the police were able to recruit 10,000 new officers but there is no impact on their salaries because we have cleaned up those who have or who shouldn’t have been there and so they can now create 10,000 new jobs. So, there is quite a bit of job creation activity going on as a result of some of the interventions we have done.”
On the problems inherited by the government, she said, “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 dollars outstanding to the oil companies. I mentioned the cash calls of $5 billion dollars 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.
“The international borrowings will begin to come in Q3 that is always our projections we would take initial money from Nigeria as we sorted things out and we go on the road to borrow internationally.”
“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? All the smuggling that was going out of the country based on the subsidy that we were providing have stopped; those are real savings to the economy, which we are now redirecting into the essential infrastructure that will get this economy going.”