The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said although the projected global economic recession for 2023 seemed inevitable, with about $34 billion in the nation’s foreign reserves, the projected decline in profit, revenue and growth shouldn’t pose much threat to Nigeria.
Speaking during an interview with Arise News Channel at the ongoing World Economic Forum (WEF) in Davos, Ahmed hinted that the government was considering a gradual phasing out of petrol subsidy payments starting from April, instead of removing it all at once in June.
Ahmed further said that she wasn’t feeling ‘betrayed’ by the refusal of President Muhammadu Buhari to remove subsidy payments, having stuck out her neck on the issue for years without much success.
Her words: “It is quite likely that there will be a global recession. From the reports we’ve seen from the World Bank and the International Monetary Fund (IMF) and other forecasts, there will be a global recession. How it will affect the globe, of course will be different from sub-region to sub-region. But clearly there’s going to be a decline in growth on a general basis.”
She explained that even China as big as it is was predicted to see a reduction in growth, partly due to the sustained economic impact of the COVID-19 pandemic.
“We have seen the resurgence of COVID-19 in some developed economies, especially China, but also the effect of the Russia Ukraine war that is having a global impact.
“The quantitative easing that is implemented by central banks across the world also contributes to high cost of interest, resulting in high inflation rate, which means people’s spending power is weakened as a result. So there are all indications that there will be a global recession,” she noted.
On the topic of how Nigeria intends to weather the coming storms and whether Nigeria has enough foreign reserves like it did around 2008, when it had reserves of over $60 billion, Ahmed noted that the country has about $34 billion, and it was enough to sustain imports for six months.
“It is true we had higher reserves during the first global recession. Our reserves are now at $34 billion. So that is still a healthy level. It means we’re able to meet at least six months of imports and other expenses into the country.
“It means we can withstand another global shock if we’re able to carry through a coordinated response between the monetary, fiscal as well as trade authorities. We have learned a lot from the experience that we went through during the COVID. And it showed that when we plan as one, we can actually withstand the shocks,” she explained.
She concluded by noting that the last recession in Nigeria was short-lived because of the coordinated efforts of both government and private sector, including scaling back on some categories of government spending.