President Muhammadu Buhari has expressed optimism on the capacity of the Nigerian economy to rebound strongly in the near term with the right policy responses to the multi-dimensional crises created especially by the COVID-19 pandemic.
The economy contracted by 6.1 per cent in the last quarter heralding a slide towards another round of recession in about two years.
Buhari noted that since the government cannot simply wait for things to get better on their own, "we have to formulate appropriate policies and implement them steadfastly in order to address the challenges head on".
In an address presented on Monday at the 13th annual Chartered Institute of Bankers of Nigeria (CIBN)'s banking and finance conference with the theme, "Facilitating a Sustainable Future: The Role of Banking and Finance," the president said so far, the federal government had implemented a wide range of fiscal, prudential and monetary measures that squarely address four key necessities.
Represented by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, he listed the four measures as ensuring sufficient liquidity, in part to support government programmes for saving lives and livelihoods; maintain stability of the financial system; ensuring continued delivery of financial services to the public; and shore up confidence and cushion economic activity.
He noted that the banking system, which is a critical component of the financial sector, is not immune from the potential impact of the current economic situation as banks have to restructure potentially bad loans in every sector of the economy.
Buhari recalled that it has been nearly six months since the World Health Organisation (WHO) declared COVID-19 a pandemic.
He stated: "Since then, lockdown of varying degrees and durations have been implemented in different jurisdictions of the world, some more successful than others. But while a few countries have reported some successes in fighting the spread of the virus, resurgence in COVID-19 cases continues to be seen in many parts of the globe.
"Consequently, business activities have been disrupted, and the global economy is set to contract this year. The International Monetary Fund, in its report released in June 2020, expects the global economy to shrink by 4.9 per cent this year, worse than the negative 3.0 per cent projection made in April.
"Nigeria is not spared either, as the economy recorded a negative growth of -6.0% in the second quarter according to the data recently released by the NBS.
"This is against the backdrop of the real GDP decline from 2.55% in Q4 2019 to 1.87% during Q1 of 2020 reflecting the earliest effect of disruptions to the global supply chains caused by the COVID-19 pandemic.
"Overall, Nigeria's real GDP is projected by the National Bureau of Statistics (NBS) to relapse into a second recession in four years from Q3 and to contract by -4.2% in 2020.
"Amidst the uncertainty created by the pandemic, we're confident that the Nigerian economy will bounce back strongly within the near term with the right policy responses to the multidimensional crises."
The president observed that in response to the current health and economic crisis occasioned by the COVID-19 pandemic, the federal government had rolled out both fiscal and monetary stimulus packages in the form of domestic interventions.
Buhari stated that for instance, the House of Representatives on March 24, 2020 passed the Emergency Economic Stimulus bill, 2020 to provide a 50 per cent tax rebate for employers and business owners who agree not to make staff cuts in 2020.
"The federal government also created a N50 billion target credit facility for affected households and SMEs. It also approved additional N100 billion intervention fund in healthcare loans to pharmaceutical companies and healthcare practitioners intending to expand/build capacity.
"In addition, the International Monetary Fund (IMF) availed a $3.4 billion Rapid Financing Instrument (RFI) for Nigeria to support the health care sector, protect jobs and businesses crucial to support economic revival. Similarly, moratorium has been given to all federal government funded loans issued by the Bank of Industry, Bank of Agriculture and the Nigeria Export-Import Bank," he said.
According to him, as part of the concerted effort aimed at bridging the transition to a post COVID -19 era, the federal government in July launched a 12-month economic sustainability plan with a stimulus package of N2.3 trillion.
This amount, he stressed, is being funded by N500 billion from special accounts, N1.11 trillion structured lending by the Central Bank of Nigeria (CBN) and N302.9 billion from other funding sources.