barrels of oil

Due to COVID 19, Nigeria’s economy is projected to shrink by 3.4 percent

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By Amaka obi

In March the IMF had projected that no country in the Sub Saharan Africa will be spared by the coronavirus and countries will suffer economic downturn that will drag for years, Abebe Aemro Selassie, director of the IMF’s African Department, said during a teleconference. 

The Nigerian Government officials said on Tuesday that the economy is projected to shrink by 3.4% this year against its earlier projected growth by 2.9 percent. The economy shrinkage is as a result of the world health pandemic which has enforced it to cut budget plans for a second time.

Nigeria is assuming a lower petroleum price of $20 per barrel. Ben Akabueze, budget office director-general, said oil revenues were expected to fall by more than 80 percent and debt servicing costs were expected to rise by 200 billion naira in 2020.

It also plans to cut oil production to 1.7 million barrels per day (bpd), from the 2.1 million bpd initially proposed in the budget, under an agreement brokered by the Organization of the Petroleum Exporting Countries (OPEC)

Nigerians economy is solely dependent on its oil which makes up to about 90 percent of foreign exchange earnings and more than half of government revenue. Nigeria will speed up marginal field licensing and oil mining license renewals to try to raise revenues, Akabueze said.

Due to the shrinkage of the Nigerian’s economy, the budget will be revised for a second time, said Zainab Ahmed Minister of Finance

The Budget revisions needs to be approved by legislators before being signed into law by Mr president.

 

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