The Federal Government on Thursday confirmed that the country’s economy has entered recession and is in tough place.
Minister of Finance, Mrs. Kemi Adeosun painted this gloomy picture on the economy when she appeared before the Senate, saying since the economy has recorded two periods of negative growth, the economy is “technically in recession”
Her colleague, Minister of Budget and Planning, Udo Udoma also told State House correspondents later on Thursday that if the figures from the National Bureau of Statistics (NBS) about the performance of the just ended second quarter is also negative as expected, the country would be confirmed to be in recession.
Adeosun also 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 current economic situation.
She noted that the present administration inherited negative reserves and heavy salary and wage bill of N165 billion.
Kemi Adeosun also told the Senators that so far the government has released capital vote of N247.9 billion, with plans to release an additional N60 billion very soon.
She also disclosed that the Federal Government had released N74 billion to the ministry of works in the last two months, compared to N19 billion the ministry received for the whole of 2015.
According to her, agriculture has also got the sum of N21.9 billion, 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.
“Technically, in economic terms, if you have two periods of negative growth, you are technically in a recession. 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 recession, but I dont think we should dwell on definitions, I think we should really dwell on where we are going.”
Adeosun also expressed optimism that Nigeria would get out of the recession because she is not the only country experiencing that at the moment.
She continued: ” 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 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 quarter three.
” I can confirm 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 between filling stations for market share which is a good thing which means overtime the market would continue to correct itself.”
Speaking later in the day after the monthly National Economic Council meeting in the State House, Abuja, Udo Udoma said the ongoing activities of vandals in the Niger Delta and fall in global oil prices were responsible for the present recession.
“Recession is basically when you have two quarters of negative growth, we had a first quarter of negative growth and we are still waiting to get all the figures for the second quarter which has just ended in June. The National Bureau of Statistics (NBS) will be giving us all the figures but if as we suspect the second quarter is also negative, then of course technically you could say that we are in recession… But even if we are not, the situation in the economy right now is one that of course we are addressing,” the minister said.
He continued: “Some of it were expected, some were not. We did expect the low oil price but we did not expect the level of disruption that we got in the Niger Delta, such that oil production went down and we are not likely to achieve the 2.2 million barrel per day because it went down to 1.2 million barrel per day, a little over about 1.3 million barrel per day. So you can imagine the impact but measures are being taken to address those issues. We expect that by the third quarter we will start to pick up and we expect to finish the year in positive territory, that is what we are expecting. We expect to be marginally positive by the end of this year. But by next year we will now start to pick up and we will have much more growth next year.
But this year has been a difficult year and some of it as I said was expected but we didn’t expect the disruptions which we caused in the Niger Delta and which led to the reduction in the amount of production of crude oil and also affected power supply because a lot of our power is supplied by gas. So it affected the power supply. So that is basically it.
We are expecting the economy to begin to grow again from the third quarter unto the fourth quarter. We are focusing on non oil, we are focusing agriculture, solid mineral and manufacturing. So basically we see what we are going through as an opportunity in some ways to finally move away from total dependence on the single commodity crude oil.
We believe that Nigerians have the capacity to turn this thing around, is the private sector that is going to do it. Our role as a government is to provide the enabling environment. For that to happen we are confident that that will happen.”
The minister also allayed fears expressed by some Nigerians about the ability of government to pay salaries in October.
“ We have paid all salaries, federal government has always been paying its salaries, and there is no risk whatsoever that there is going to be a situation where federal government will not pay salaries.
Let me also say that we are about to have the Federation Accounts Allocation Committee (FAAC) meeting this month, there is an actually an increase in the amount that is going to be available in FAAC, I will let the Minister of Finance talk about the exact amount.
There is an increase because at the level of Federal Inland Revenue Service, our tax collection is going up. When I appeared before the Senate last week, I did inform Nigerians that indeed we are beginning to move up, our revenue situation is actually improving on the month already. Our tax collection is already improving, there is no doubt that we are actually going through a difficult time but things are improving.”
