MINISTER of Finance, Mrs. Kemi Adeosun, yesterday, painted a gloomy picture of the economy when she appeared before the Senate, saying the country was already in recession.
This came as Minister of Budget and National Planning, Senator Udo Udoma, gave a ray of hope on the current economic quagmire, noting that there were strong indications that the economy would rebound from later this year to early next year.
Adeosun briefed the Senate on the state of the economy and issues relating to the implementation of 2016 budget, as well as the Monetary/ Fiscal Policies adopted to salvage the present economic situation.
She also said President Muhammadu Buhari’s government inherited what she described as negative reserves and salary and wage bill of N165 billion.
The Minister equally told the senators that so far, the government had released capital votes of N247.9 billion, with plans to release an additional N60 billion very soon, even as she disclosed that the Federal Government had released N74 billion to Ministry of Works in the last two months, compared to N19 billion the ministry received for the whole of 2015.
She said: “Technically, in economic terms, if you have two periods of negative growth, you are technically in a recession.
But I don’t think we should spend too much time on that, we are in a tough place. “Whether you call it recession or not, we are in a tough place, but the most important thing is that we are going to get out of it.
Technically, we are in a recession, but I don’t think we should dwell on definitions, I think we should really dwell on where we are going.
“Everything we are doing is moving outside of it, our social intervention programmes have been funded, those of providing reliefs to the very poorest, right down to every single local government would be touched by that programme.
“We have started and we will continue with it. We are not the only country in recession, many countries are doing far worse than us. But for Nigeria, what Nigerians want to know is ‘how is that going to affect me and I want to assure everybody that what we are doing is going to work and it is going to turn this economy around.”
She said government had released N21.9 billion to the Agriculture Ministry, compared to the N4 billion the ministry got last year, adding that transport got N22 billion, compared to the N6 billion it received last year.
On whether the releases were backed by cash, the Minister said: “The releases are fully cash-backed. We have stopped the practice of releasing or approving releases that are not cash backed. We have changed that process; we now start from the position of how much cash do we have and then we release appropriately. So, all releases are cash-backed. “We predicated the budget on N197 and the rate is now N280.
The impact will be on the revenues because when the actual comes in at N280, what will simply happen is that the revenues in nominal terms will increase and that will flow through into the revenue performance.
“What will happen is that the amount of the deficit will go down because the revenue will convert dollars to naira and will give more naira into nominal terms, so that will be the impact. “I think at a time like this, blaming who was responsible doesn’t actually take us anywhere but I will tell you what I inherited.
I inherited very little by way of reserves, I inherited significant debt, contractor debt, cash calls of $5 billion outstanding to the oil companies. “I mentioned the cash calls of $5 billion outstanding to the oil companies, I equally mentioned the fact that many of the contractors, even though we have paid them N107 billion, find it very difficult to work because they are owed and some of them have not been paid since 2012.
“Their claims are over N390 billion. So, I didn’t inherit reserves that are positive.
I inherited reserves that tend to be more negative than positive because the economy is actually in very good hands and we are doing absolutely our best to get through this difficult period. “I explained how we are doing that, we have been extremely disciplined around our spending, we are investing in essential infrastructure.
We have released N74 billion to Works in two months, compared to N19 billion for the whole of last year. “We are doing everything possible to avert and to manage the situation which we didn’t create unfortunately, but which we inherited and we as a nation, must all get out of.”
The Finance Minister, who expressed optimism that Nigeria would get out of the recession, since it was not the only country experiencing this at the moment, said: “ I think if we are in recession, what I will like to say is we are going to come out of it and it would be a very short one.
“This is because the policies that we have would ensure that we don’t go below where we need to go and I think with what we are doing, we would begin to turn the corner I believe by third quarter.
“I can confirm that there is no more subsidy, it is a market-driven price and, indeed, one of the good things that we are now seeing is that prices have actually come down.
There is now competition among filling stations for market share, which is a good thing. It means that overtime, the market would continue to correct itself.”
Answering questions on the recent statement by the International Monetary Fund on the nation’s economy, the Finance Minister noted that the government was not disturbed over such remarks. She said: “I am not too worried about the IMF projection, I will tell you why, because one of the functions of the IMF is global economic surveillance.
They equally issued a negative report on Britain as a result of Brexit. I don’t think we should panic every time IMF speaks.
“I think we need to be confident around what we are doing and where we are going.
I remain extremely confident, as I said around Nigeria, IMF has given their projections which is, we may continue into negative territory and I am not sure what we have seen suggests that.
Agriculture output seems to be going up. If you even look at inflation, which is very high, the one for this month reduced and that tells you that things are moving in the right direction. “If you look at what is happening in the petroleum sector before subsidy, we were subsidising around 45 million litres of fuel a day.
Now without subsidy, usage has dropped to 26 million litres so what does that tell you?” Budget 2016 On the projected implementation of 2016 budget, the Finance Minister said: “The projected rate of implementation of the budget, I found out that is the difficult question to answer simply because there are quite a few moving parts in terms of our revenue and many of our revenues will come in quarter three.
“For example, most companies’ year end is December, so it is from September that they begin to pay their taxes for the year.
So I think I have a clearer picture a little bit and if you don’t mind, we could defer giving us specific projections.
“But I am very confident that we will do very well, at least, we will do over 60 per cent, based on projections, but I think that our revenues will be better if the economy sustains its trajectory.
“What are areas of priority, I think we have been fairly consistent that we needed to invest in infrastructure and in our releases, we have tried to prioritize those areas and also to work with seasonality.
“For example, Works Ministry needs to have their money during the dry season because during the rainy season, works stop and we are trying to execute the releases to ensure maximum impact.”
Asked by the Senate on when the 2017 budget would be ready, Adeosun said: “On the 2017 budget, I believe the Minister of Budget and Planning has started working on putting that document together.
“The question about the interest of Nigerians, I think it is a very good one. Job creation and reserves.
One of the things that I mentioned that we have done is release this money for the first time for the social intervention programmes.
“We have released N15 billion of capital and we put in N5 billion this month for recurrent and so that recurrent will continue to increase as they roll out the implementation of things like duty calls, agriculture extension workers and other job creation initiatives.
On borrowing, the Minister noted that the government was borrowing locally, with plans to go international later.
“We have been borrowing largely from the domestic market because we needed to get the exchange rate sorted out to enable us borrow from the international market.
“International borrowings will begin to come in quarter three, that is always our projection. We would take initial money from Nigeria as we sort things out and we go on the road to borrow internationally.”
We’ll come out of it— Udo Udoma Udoma who fielded questions from Journalists, in company of Taraba State governor, Mr. Darius Ishaku, and his Niger State counterpart, Abubakar Bello at the end of National Economic Council chaired by Vice President Yemi Osinbajo at the presidential villa, Abuja, yesterday, also confirmed the Finance Minister’s declaration that the economy was in recession.
He acknowledged that 2016 had been bad for the economy, due mainly to the restiveness in the Niger Delta, which had led to blowing up of oil and gas pipelines by militants.
He, however, said the federal government was working assiduously to diversify the economy by developing other sectors such as agriculture and solid minerals.
The minister also dismissed speculations that the federal government was owing workers salaries at the federal level