The Coronavirus Virus nicknamed Covid-19 is bringing the world economy to its knees and Nigeria is not an exception . What started in Wuhan China this year as a domestic crisis has ballooned into a pandemic spreading to all the continents.
Sadly, In the midst of the Coronavirus plague, crude oil prices crashed to as low as $27 after Saudi Arabia shocked the market by launching a price war against Russia.
The crash of the crude oil sent panic waves across the country as the 2020 budget premised on the crude oil benchmark price of $57 seem to be in jeopardy.
Speedily, President Muhammadu Buhari set up a committee to assess the impact of the crash on the 2020 budget. The members of the commitee include minister of finance, budget and National planning, Zainab Ahmed, governor of the Central Bank of Nigeria, Godwin Emefiele, minister of state for petroleum; Timipre Sylva, the group managing director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, and the minister of state for budget and national planning, Clement Agba.
After the first meeting of the committee with the President, the finance minister hinted that it was very clear that the federal government would have to revisit crude oil benchmark price, pointing out that it was inevitable to cut the size of the budget.
Also two days later, President Buhari had lamented that the recent decline in crude oil prices will affect the ability of the government to meet the infrastructure and human capital needs of the country in the mean time.
There is no denying the fact that the country is caught between the Devil and the deep blue sea. The country will have no choice but to revisit and reduce the 10.7 trillion naira 2020 budget.
Already, the federal government hinted that it may have to drop its plans to borrow $22.718 billion to finance infrastructure and other social development projects.
A major reason the federal government is presently considering for the suspension of the external borrowings is the unfolding events of the past few months with particular regard to coronavirus pandemic and the oil price crash at the international market.
The Senate, on Tuesday, said that a cut to the N10.594 trillion budget for 2020 passed by the National Assembly on December 5, 2019, is inevitable in view of the crash in crude oil price internationally.
The resolution was reached sequel to the adoption of the recommendations of the report of the Joint Committee on Finance; Appropriations; National Planning and Economic Affairs; and Petroleum Resources (Upstream).
Accordingly, the Upper chamber, while adopting the recommendations of the Joint Committee during plenary, resolved that the National Assembly, upon agreement with the Executive arm of Government, would review downward the Appropriation Act 2020.
With this groundwork, it was, therefore, little surprise when the Federal Executive Council (FEC) approved a N1.5 trillion cut in the 2020 budget, among other drastic measures meant to safeguard the nation’s fragile economy. According to the Minister of Finance, the budget cut reflects 20 percent of recurrent and 25 percent of capital expenditures. Government also went ahead to reduce the pump price of petrol from N145 to N125 per litre to reflect the crude price at the global market and also slashed the benchmark to $30 from $57 prescribed in this year’s budget.
Regrettably , the lip service that successive administrations have paid to diversification of the economy has come home to roost. In a mono product dependent economy like Nigeria ,with the crash of crude oil prices,economic recession is imminent .
Experts have also predicted that the coronavirus outbreak has triggered extreme fear in financial markets which could tip the world into a recession.
Already, the Economic advisory council had painted a gloomy picture of what could happen to the Nigerian economy, if the Covid-19 pandemic lasted for too long. These include; slower growth, as the supply and demand sides of global economy would be affected, uncertainty, which would erode confidence, governments acting unilaterally instead of cooperatively, further drop in oil prices, and lockdowns gaining grounds around the world.
There would also be oil glut, trade imbalance, drop in foreign reserves, and rise in unemployment.
Noting that many countries round the world may go into economic recession, the PEAC advocated hard work for Nigeria to keep its head above the waters.
Without arguments, time has come to take some hard and fast decisions and the government has exactly done the needful. This newspaper suggests that the first victims of the budget slash should be the 37 billion naira earmarked for the renovation of the National Assembly complex and billions for foreign travels for the executive arm of government. We also believe that time is ripe to prune the civil service which in our view is over bloated and unproductive. In recent years , the civil service has been more or less a welfarist scheme. In our opinion, there is no better time than now to restructure the service inorder to meet the modern development needs of the country.
We commend the federal government in its relentless efforts to contain the spread of the deadly virus and we wholeheartedly support the travel ban which is expected to curb its spread in our shores. Government, we advise, should not rest on its oars until. No stone should be left unturned in efforts to insulate the country’s teeming population from the rampaging virus.