President Muhammadu Buhari made this known yesterday, October 8, while presenting the 2021 budget to the National Assembly for approval. He noted, however, that the Federal Government has put in place plans to ensure rapid recovery in 2021.
The President said the country is heading for another recession, the second in four years.
He spoke against the backdrop of a significant increase in deficit beyond the provisions of the Fiscal Responsibility Act, following revenue pressures faced by the government.
He said: “The 2021 Budget was prepared amid a challenging global and domestic environment due to the persistent headwinds from the coronavirus pandemic.
“The resulting global economic recession, low oil prices and heightened global economic uncertainty have had important implications for our economy.
“The Nigerian economy is currently facing serious challenges, with the macroeconomic environment being significantly disrupted by the coronavirus pandemic.
“Real Gross Domestic Product, GDP, growth declined by 6.1 per cent in the second quarter of 2020. This ended the three-year trend of positive, but modest, real GDP growth recorded since the second quarter of 2017.
“I am glad to note that, through our collective efforts, our economy performed relatively better than that of many other developed and emerging economies.”
He continued: “GDP growth is projected to be negative in the third quarter of this year. As such, our economy may lapse into the second recession in four years, with significant adverse consequences.
“However, we are working assiduously to ensure a rapid recovery in 2021. We remain committed to implementing programmes to lift 100 million Nigerians out of poverty over the next 10 years.
“As skills’ deficits limit employment opportunities in the formal economy, various skills’ development programmes are being implemented simultaneously to address this problem frontally.
“For instance, the government is implementing the Special Public Works programme to provide employment opportunities to 774,000 youths across the 774 local government areas of Nigeria.
“We have also recently introduced the N75 billion Nigeria Youth Investment Fund, of which N25 billion have been provided in 2021 Budget.
“We thank all Nigerians, for your perseverance and continued support during these difficult times. We remain unwavering in our commitment to actualize our vision of a bright future for everyone.”
Against the backdrop of the revenue pressures faced by the Federal Government, the 2021 Appropriation Bill showed a significant increase in deficit beyond the provisions of the Fiscal Responsibility Act.
The deficit, inclusive of government-owned enterprises and project-tied loans, is projected at N5.2 trillion, which represents 3.64 per cent of estimated Gross Domestic Product, GDP, 0.64 percentage point above the 3.0 per cent threshold set by the Fiscal Responsibility Act, 2007.
Explaining this position, Buhari, however, stated: “We still face the existential challenge of coronavirus pandemic and its aftermath; I believe that this provides a justification to exceed the threshold as provided for by the law.”
Giving further details on the deficit, he said: “The deficit will be financed mainly by new borrowings totalling N4.28 trillion, N205.15 billion from Privatization Proceeds and N709.69 billion in drawdowns on multilateral and bilateral loans secured for specific projects and programmes.”