Nigerian faces the possibility of falling into recession — the second in four years — except there is a strong third quarter economic performance, the Federal Government has warned.
Minister of State for Finance, Budget and National Planning, Clement Agba said this yesterday at an interactive session organised by the House of Representatives Joint Committees on Finance, Appropriation, Budget and Economic Development as well as Loans and Debt Management.
He warned that Nigeria faces significant medium-term fiscal challenges, especially in revenue generation, which if not immediately addressed, could snowball into a debt sustainability crisis.
Agba, who represented the Minister for Finance, Budget and National Planning Mrs. Zainab Ahmed, admitted that the Nigerian economy faced serious challenges in the first half of this year, with the microeconomic environment significantly disrupted by the COVID-19 pandemic.
He said massive output cut by OPEC and its allies to stabilize the world oil market was another key development in the international crude oil market with Nigeria contributing about 300,000 bpd of production cuts.
The Minister explained that the Impact of these developments is about 65 per cent decline in projected net 2020 government revenues from the oil and gas sector, with adverse consequences for foreign exchange inflows into the economy.
He said in response to the developments affecting the supply of foreign exchange to the economy, the Central Bank of Nigeria (CBN) adjusted the official exchange rate to N360/USD1, and more recently to N379/USD.
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