Key Takeaways from Citizens Dialogue Session with Finance and Budget Ministry


Tuesday, May 05, 2020 / 8:14 PM  / By CardinalStone Research / Header Image Credit: @FinMinNigeria


Proshare Nigeria Pvt. Ltd.

Key Takeaways from the Citizens Dialogue Session on Government Fiscal Policy Decisions in Response to the Fall in Oil Prices and the COVID-19 Pandemic

The Ministry of Finance, Budget and National Planning and the Department for Internal Development (DFID) held a citizen's dialogue session (earlier today) on Nigeria's response to the fall in oil prices and the COVID-19 pandemic. The panel was led by the Minister for Finance, Budget and National Planning, Mrs. Zainab Ahamed, who was ably supported by Prince Clem Agba (Minister of State, Budget and National Planning), Mr. Ben Akabueze (DG Budget Office of the Federation), and Lade Jaiyeola (CEO, Nigeria Economic Summit Group).


A.     Below are some takeaways from the representatives of government

1.    Government expects GDP to contract by 3.5% YoY in 2020

2.    Oil earnings is now projected to decline by 90.0% in 2020

3.    Estimated net oil & gas revenue available for Federation Account Allocation Committee (FAAC) distribution is now forecasted 80.0% lower at N1.1 trillion (vs. N5.5 trillion previously), despite a N649 billion reduction in allowable fiscal deductions by NNPC for federally funded projects/expenditures. Specifically, projected PMS under-recovery has been reduced from N457 billion to zero

  • Oil production now projected at 1.7mbpd (vs. 2.18mbpd previously)
  • Oil prices expected to average $20 per barrel (vs. budget benchmark of $57 per barrel)
  • Average production cost of Nigerian crude has been revised downward to $28 per barrel from $33 per barrel (with implications for Petroleum Profit Tax)
  • A severe outbreak of COVID-19 in Nigeria could magnify the impact of low oil price and weaker domestic crude production

4.    Customs revenue is now projected at N1.2 trillion in 2020 (vs. N1.5 trillion previously)

5.    Amount accruable to VAT pool account now forecasted at N2.0 trillion in 2020 (vs. N2.1 trillion previously)

6.    Amount accruable to federation account now projected at N3.9 trillion (vs. N8.6 trillion previously)

7.    Projected federal government receipt from federation account for 2020 is now put at N2.4 trillion (compared to N4.8 trillion previously)

8.  States and local governments are now likely to obtain N2.1 trillion and N1.5 trillion, apiece, from FAAC (compared to N3.3 trillion and N2.5 trillion, respectively, in previous estimates)

9.   Projected N5.6 trillion budget deficit to be financed through privatization proceeds (N126 billion), drawdowns from FGN Special Accounts (c.N260 billion), bilateral/multilateral drawdowns (N387 billion), and new borrowings (N4.6 trillion)

10. Debt service pressure to be eased by significant moratoriums on new loans (IMF's RFI of $3.4 billion comes with 3 years moratorium) and expected deferrals of current debt service obligations until macro conditions improve

11. As part of measures to alleviate the impact of COVID-19, the government has set up an Economic Sustainability Committee to, among others, assess systemic vulnerabilities and develop programs that would make the expected recession short-lived and ensure sustainable long-term growth

12. Measures are underway to strengthen agricultural value-chain with strategic focus on land acquisition, road networks, and funding. Government also plans to offtake agro-products when market conditions are unfavourable

13. Government is looking at funding supports for the aviation sector

14. The president is likely to decide on land border closures after the current health crisis. Negotiations with neighboring countries have been smooth

15. Although similar challenges were faced in 2016, Nigeria currently has significantly lower fiscal buffers. In view of the challenges, government has approved the integrated policy framework recommended by the CMC and adjustments to the 2020 budget

16. The budget office is finalizing a revised 2020-2022 Medium Term Expenditure Framework and Strategy Paper (MTEF/FSP) as well as an amendment to the 2020 Appropriation act


Proshare Nigeria Pvt. Ltd.

B.     According to Nigerian Economic Summit Group (NESG)

  • Nigeria needs N10.1 trillion worth of interventions but current intervention capacity stands at N4.5 trillion
  • The implied funding gap of N5.6 trillion is likely to be covered by

1.  Medium to long term domestic borrowing

2.  External borrowings (possibly from World Bank, IMF, IFC, AFDB)

3.  Quantitative easing


  • Total announced stimulation (FG, CBN, e’tal) currently stands at N4.5 trillion or 3.1% of GDP (vs. 10.0% of GDP in South Africa)


Proshare Nigeria Pvt. Ltd.

Related News

  1. Ahead of Tomorrow on WebTV: Discussions on COVID-19; Business and Economic Stability
  2. Little Change in Concessional Loans to States
  3. Poverty and Inequality in Nigeria 2019: 40% of Total Population Classified as Poor
  4. PMI Reading No 85: Damage From the Lockdown
  5. The Lockdown - Food Scarcity and Social Unrest Looming
  6. April 2020 Headline Inflation Will Cross 13.0% - FDC
  7. Nigerian Economic Update: A Throw of the Dice
  8. Guidelines and Recommendations: Reopening the Nigerian Economy
  9. GDP By Income and Expenditure Approach Q4 2019 - Household Final Consumption Declined by -2.40%
  10. Ahead of Tomorrow on WebTV: Discussions on COVID-19; Reinventing Nigeria's Economy
  11. Nigeria Weekly Update: Short and Long Currency Cycles
  12. Nigeria Needs A National Strategy To Integrate Factor Endowment Into A Plan - Prof. Utomi
  13. A Surprising Boost to the FAAC Payout; April Payment Amount to N781bn
  14. Ahead of Tomorrow on WebTV: Discussions on Repositioning Nigeria's Economy Beyond COVID-19
  15. Impact of Privatization on Nigeria's Economy
  16. Can Africa Afford COVID-19 Lockdowns? - Chukwuma Soludo
  17. COVID-19; Nigeria Needs To Relax Foreign Exchange Management To Boost Industrialization - Dr. Yusuf
  18. Nigeria's Economy After Oil: How Should We Prepare?
  19. The Disruptive Impact of COVID-19
  20. Nigeria's Impending Recession

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.
Related News