Nigeria's Minister of Finance, Zainab Ahmed, says the West African nation's economy will recover from its current decline by first quarter of 2021. Ahmed's projection comes amidst several projections that Nigeria's economy will slide into recession in the third quarter of 2020.
Nigeria's economy declined by six percent in the second quarter of this year according to the Nigerian Bureau of Statistics (NBS). If the economy shrinks again in the third quarter - which is between August to October 2020 - the economy will enter a recession.
Note that economy slides into recession if it contract in two conservative quarters. Several international agencies have made projections of the extent Nigeria's economy will decline. The World Bank said Nigeria's impending recession will be the worse in history - Nigeria's last recession was 2016.
According to Ahmed, her recovery projections was formed based on the minimal impact of the COVID-19 pandemic on Nigeria's economy. She made this statement during a courtesy visit by the Federal Inland Revenue Service (FIRS) to her office.
The impact of the COVID-19 pandemic has already increased Nigeria's debt to $31 trillion, thereby, compounding the debt problem of Nigeria amidst declining revenue. And Ahmed said for Nigeria to be able to service its debt, the FIRS needs to improve its revenue generation.
“The shocks have not manifested as expected and that the pandemic has not impacted much, especially in Nigeria because of the proactive measures taken by the government especially in the health sector. We are expecting by the first quarter of 2021, we shall be okay.
“There are other government obligations and debt servicing which requires revenue to fund and we can see that the capacity to do more is there and we expect you (FIRS) to do more”.
She further stated the importance of value-added tax (VAT) and the stamp duty to Nigeria's economy is enormous, “the FIRS has remained resolute as both value-added tax (VAT) and stamp duty have helped in boosting the revenue."