The federal government yesterday warned that except the the country achieves a strong economic performance in third quarter of 2020, there is the possibility of sliding into a second recession.
Minister of state for Finance, Budget and National Planning, Clement Agba disclosed this while speaking at an interactive session with the House of Representatives joint committees on Finance, Appropriation, Budget and Economic Development as well as Loans and Debt Management.
He also warned that Nigeria faces significant medium-term fiscal challenges, especially with respect to its revenues, which if not immediately ad- dressed could snowball into a debt sustainability crisis.
Agba who represented the Minister for Finance, Budget and National Planning, Zainab Ahmed at the event, said Ni- geria is currently exposed to spikes in risk aversion in the global capital markets.
He said its present condition could put further pressure on the for- eign exchange market as for- eign portfolio investors exit the Nigerian market.
He admitted that the coun- try's economy faced serious challenges in the first half of 2020 with the microeconomic environment significantly disrupted by the COVID-19 pandemic.
According to him, crude oil prices declined sharply in the "mild market with Bonny Light crude oil price drop- ping from a peak of US$72 pb on January 7, 2020 to below US$20 in April, 2020 as a re- sult of which the US$57 crude oil price benchmark on which the 2020 budget was based be- came unsustainable.
He further said that massive output cut by OPEC and its allies to stabilise the world oil market was another key de- velopment in the international crude oil market with Nigeria contributing about 300,000 bpd of production cuts.