An April forecast by the International Monetary Fund has been reviewed downwards to show that the Nigerian economy would contract by 5.4 per cent.
According to the IMF’s World Economic Outlook in April, Nigeria was to expect a 3.4 per cent contraction of its economy, but in the face of the havoc being wreaked by the COVID-19 pandemic, the international lender says that projection is no longer realistic.
In its June World Economic Outlook, the IMF states that the pandemic has had more negative impact on global economic activities in Q1 2020 than anticipated.
Commercial activities are still not fully open in Nigeria while the aviation industry is still on lockdown as the country’s COVID-19 cases rose to 22,614 on Thursday.
The oil industry which has been the main sustenance of the Nigerian government lost $125bn of its projected revenue in the first quarter of 2020. The government says it feared at least 70 per cent of its oil revenue would be lost by the end of 2020.
Meanwhile, the Nigerian government announced a $6bn stimulus package on Wednesday as part of its Economic Sustainability Plan which focuses on strategic industries that are most affected by the pandemic like the aviation, hospitality and oil industries.
A committee led by Vice-President Yemi Osinbajo put forward the proposal amid an intense pressure to stimulate growth and cut debt arising from the oil price slump.
Osinbajo who heads the economic team said unless the nation takes prompt pre-emptive measures; millions of Nigerians would fall into extreme poverty, before the Covid19 pandemic ends.
The committee predicts that 4 out of 10 Nigerians could be out of jobs by the end of 2020. The plan is expected to create jobs and keep as many people on their jobs as possible with the expection that the stimulus package would be enough to prevent the economy from slipping into a recession.
However, Nigerians are skeptical. In the past, such economic stimulus has been misappropriated by government officials with no accountability by agencies expected to have supervised the use of such funds.