FG targets single digit inflation, reveals the facts behind the country’s exit from recession

By A’isha Biola Raji

The Federal Government of Nigeria has set goals on how to bring down inflation to single digit figure while explaining on how the nation overcame the last recession.

The minister of Finance, Budget and National Planning, Hajia Zainab Shamsuna made this known in Aso Rock Villa Abuja, at the maiden edition of State House Briefing held on Thursday.

At the briefing, which focused on the Economy and Economic Recovery, the Finance Minister said in 2020, there were projections about Nigeria going into a recession (caused by Covid-19 and the crash in crude oil prices) and exiting it in Q4 2020 (fourth quarter of 2020) or Q1 2021 (first quarter of 2021) which had been realised.

According to Shamsuna, the Economic Sustainability Plan (ESP), produced by a Committee set up by President Muhammadu Buhari and Chaired by Vice President Yemi Osinbajo, largely contributed to the exit of Nigeria from the recession.

The minister said, to support the State Governments, the federal government had granted them a stay on debt service obligations for a period of 12 months, which according to her will expire in about 2 months with a possibility of extension.

She said, “We were able to source for funding from DFIs – IMF, AfDB, IDB and others, to reflate the economy in the face of the Coronavirus pandemic.”

The minister said government is determined to bring down inflation to single digit by working with the Presidential Economic Advisory Council (PEAC). “We have a major target to bring down inflation to single digits. We are working with PEAC and the Central Bank of Nigeria to achieve this,” she mentioned.

According to her, the largest contributor to inflation in Nigeria is food inflation. “When you decouple it, you find that transport costs are the largest contributor,” she pointed. This she said, had necessitated the decision to reduce import duties on tractors and other vehicles, in the Finance Act of 2020.

She said Nigeria’s debt is still very much within sustainable limits. “We need to roll out infrastructure now, and grow the economy now, not later. Our focus is on growing our revenues,” she said.

Speaking further, she said Nigeria government have been able to record 97% budget performance in 2020.

She said, “Every year we have provisions for sale of FGN Assets. 2021 not going to be different. There’s a BPENigeria workplan for this. Assets that are dead or non-performing will be sold to credible investors who can revive them. Asset sales are not primarily for budget financing.

While making clarification on Finance Act 2020, she said it includes exemption from Personal Income Tax (PIT) for minimum wage earners. “There’s also Exemption from Education Tax for small businesses (gross annual turnover of N25m or less), in addition to exemption from CIT introduced in Finance Act 2019,” she pointed.

On continuation of rail line project, the minister said plans are still ongoing. “We are at the final stages of negotiation with China Exim Bank for financing of the Ibadan-Kano section of Lagos Kano Rail,” she mentioned.


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