Dayo Omoogun
The Minister of Finance, Budget and National Planning, Zainab Shamsuna Ahmed, has announced a package of fiscal stimulus to mitigate the negative impact of the current economic shutdown instigated by the coronavirus pandemic and to avert a total collapse of the nation’s economy.
Speaking at a press briefing on Monday at the Ministry’s headquarters in Abuja, the Minister reeled out a number of measures in this regard. These include:
A N500 billion intervention fund which will draw from various special accounts.
This fund according to the Minister will be deployed to: upgrade healthcare facilities as earlier identified by the Presidential Task Force on COVID-19 and approved by Mr. President; finance the Federal Government’s Interventions to support States in improving healthcare facilities; finance the creation of a Special Public Works Programme; and Fund any additional interventions that may be approved by Mr. President.
Expatiating on the Special Works Programme, she said the pilot programme which was earlier approved for 8 states has now been extended to cover the 36 states and the FCT from October to December 2020.
She disclosed that the programme is planned to employ about 1000 people from each of the 774 local government areas of the country. The sum of N60 billion has been earmarked from the COVID-19 Crisis Intervention Fund to take care of the personnel and operational costs of this initiative.
Health Sector Support for States
Providing enhanced financial support to the states and FCT in order to emplace critical healthcare infrastructure in their various jurisdictions. She said the government was working towards accessing a total of $182m facility from the Regional Disease Surveillance Systems (REDISSE) for this purpose aside the $8m already accessed by the NCDC.
She said a direct intervention of N102.5b has been made available out of which NCDC and the Lagos Government were supported to the tune of N6.25b and N10b respectively while the FCT and Ogun State will also be supported soon according to agreed criteria by the Federal Ministry and the NCDC.
She added that efforts were in top gear to settle the hazard allowance of the federal health workers as a way of motivating them and enjoined the states to do same for their own health sector workers.
Engagement with Multilateral Institutions
Government is engaging with the Islamic bank, World Bank, International Monetary Fund and Africa Development Bank (AfDB) for concessional funding to support the 2020 budget implementation.
Upon being prodded she revealed the expected figures as $2.5b from the World Bank and $1b from the AfDB.
“We have requested from the World Bank $2.5b and for the African Development Bank $1b. Let me state that the request we’ve made to the IMF, the World Bank, the Islamic Bank and the African Development Bank are requests for donations for the federal Government and the States. For example the request from the World Bank is $1.5b for the Federal Government and $1b for the states.”
In addition, the Federal Government has applied to the International Monetary Fund’s COVID-19 Rapid Credit Facility to draw on its holdings with the World Bank Group and International Monetary Fund. Each member nation is entitled to a facility of 50 to 100 percent of its holdings. Nigeria has applied for 100 percent of its holdings which currently stands at $3.4b.
“Nigeria has a contribution of $3.4b with the IMF and so we are entitled to draw up to the whole of that $3.4b. We have applied in the first instance for the maximum amount but in the process we will negotiate so we might get the maximum amount or less but that is our contribution with the IMF”, the Minister said.
Explaining further, she said “And this is a provision that the IMF has made for every member-country; that you can apply for between 50 to 100 percent of your contribution. Again this is a programme that has no conditions attached to normal IMF programmes. Up till today, we are told that about 80 member countries have applied to draw from their contributions”
FAAC Support
The Federal Government plans to withdraw the sum of $150m from the Sovereign Wealth Fund to make up for the expected shortfall in oil earnings in order to sustain the June 2020 Federation Accounts Allocation Committee (FAAC) disbursements.
Another measure to close the gap of reduced states’ allocations from FAAC is the plan to grant debt and interest moratorium to states in respect of Federal Government and CBN based loans.
“Accordingly, once monthly average FAAC receipts fall below a specific threshold, interest and capital payments by States shall be suspended till monthly average FAAC receipts exceed the threshold.”
She said that the details of this moratorium will be expeditiously worked out and submitted for the President’s approval.
Review of 2020 Budget
Having considered the unfavourable emerging realities in the oil market where prices have been floundering substantially from the budget benchmark of $57 per barrel, to as low as $19 per barrel on Friday last week April 3 2020, government is constrained to revise the budget to a more realistic benchmark of $30 per barrel and a daily production of 1.7million barrels per day against the earlier budget proposal of 2.18 barrels per day. Non-oil receipts are also being subjected to similar downward adjustments.
Tax Cuts
The Minister recalled the very generous tax cuts for low and medium income earners which were fortuitously provided in the 2019 Finance Act.
“Corporate tax rates for Medium-sized Enterprise were cut from 30% to 20%, and Small / Micro Enterprises are completely exempt from corporate taxation. This tax relief will be invaluable for businesses in the large informal sector that earn N25 million or less in a financial year”.
The expanded VAT exemption provisions in the Act also covers “essential food, medical supplies and other basic items that are critical in our efforts to address the COVID-19 Pandemic” she added.
TSA Adjustment
Ahmed announced a slight restructuring of the Treasury Single Account to facilitate collection of donations towards the fight against the pandemic. To this end, COVID-19 Donor accounts are to be opened in the following banks: Access Bank, Zenith Bank, GT Bank, First Bank and United Bank of Africa.
“In the interim, Mr. President has approved the restructuring of the Treasury Single Account (TSA) in order to better mobilize cash donations from the generality of our people and corporate bodies across the nation, create flexibility and build a coalition with financial institutions while maintaining the sanctity of the TSA”, she said.
She thanked medical personnel who are in the frontlines of the fight against the COVID pandemic praising them for their patriotism and dedication.
Present at the briefing were the Minister of State Ministry of Finance, Budget and National Planning, Clement Agba; Permanent Secretary, Ministry of Finance; Permanent Secretary, Ministry of Finance (Special Duties); Chairman Federal Inland Revenue Service, Muhammed Nami; Acting Commissioner, National Insurance Commission Sunday Thomas; DG Budget Office Ben Akabueze; DG Debt Management Office Patience Oniha; Special Adviser to the President Ajuri Ngelale and a host of others.