The federal government has suspended its $22.7 billion external borrowing plan, the Minister of Finance, Budget and National Planning, Zainab Ahmed, announced on Monday.
The minister spoke at the 2020 International Conference on the Nigerian Commodities Market organized by the Securities and Exchange Commission (SEC) in Abuja.
She said the decision to jettison the plan was taken "due to current realities in the global economic landscape."
Ravaging impact of COVID-19
The breakout of the deadly coronavirus late last year has completely unsettled the world economy, with the price of crude oil plunging to the lowest level since 2016.
With the Nigerian economy dependent on oil revenues to finance the budget, the unprecedented crash in oil prices below the approved benchmark price of $57 per barrel has rendered approved estimates in the budget unrealistic.
Mrs Ahmed said the government would not even be keen to proceed with the borrowing plan even if the National Assembly gives the approval for it to go ahead.
"The current market indices do not support any external borrowings at the moment, despite that the parliament is still doing its work on the borrowing plan.
"One arm of the parliament has completed their work, and the other arm is still working. So, it is a process controlled entirely by the parliament itself. We are waiting," she said.
PREMIUM TIMES earlier reported how the borrowing plan was approved by the Senate. The House of Representatives is yet to approve the plan.
On Monday, the minister said the government will defer the plan and watch the market till when the timing is right.
She said the government would continue to focus its efforts on its plan to diversify the country's economy.
The unfolding events of the past few months, especially the coronavirus pandemic and the oil price wars in the international oil market have further reinforced the government's resolve to diversify the national economy.
The current challenges in the global economy, she noted, have brought to the fore the need for Nigeria to focus its attention on the development of a non-oil attitude to everything.
The federal government, the minister said, would prioritize its expenditure in favour of major capital expenditures that would have greater impact on job creation, visibility as well as enhance the ease of doing business in the country.
"The expenditures that are not critical must be deferred to a later date when things become more normal.
"Several national plans, programmes and projects have been directed at diversifying the production and revenue structures of the economy," she said.
Noting some achievements in the areas of production and revenue, she stressed the need to do more to boost production and exports base, less vulnerable to external shocks and provide more opportunities to the teeming population.
Driver of diversification
At the event, Vice President Yemi Osinbajo said the government was taking steps towards developing the Nigerian commodities market as a major driver for economic diversification efforts.
Mr Osinbajo said the government was working on diversifying the economy and broaden its revenue sources.
This, he said, would need the government to develop other channels of generating revenue and foreign exchange.
"This need is further underscored by the recent drop in the global price of crude oil, which also constitutes a major threat to achieving the planned government expenditure," he said.
He said there are other initiatives towards mapping, quantifying and efficiently exploring the nation's solid minerals deposits.
Such efforts, he said, are equally necessary to diversify the country's revenue sources from oil and create more opportunities in the regions where such solid minerals are deposited.
Some of these developments in Nigeria's agriculture and solid minerals sectors present the emerging opportunities to be fully explored to the benefit of everyone in the country, as well as the foreign partners.
The acting Director-General of SEC, Mary Uduk, said the country was well endowed with agricultural, metal and energy commodities, whose potentials are not yet realised.
She said the good news was that the capital market could provide an avenue to unlock these potentials and diversify the nation's economy, provide jobs, create value and contribute to governments' revenue.
"We believe if we can develop and institutionalise a vibrant commodities trading ecosystem in Nigeria, we can substantially address problems of lack of storage, poor pricing, non-standardization, and low foreign exchange earnings affecting the country's agriculture and other commodities sub-sectors," she said.