Economy & Politics
House of reps pass N10.8 trillion revised 2020 budget, approve $5.5 billion external loan
The lawmakers also approved the request by the President for an external loan of $5.513 billion by the Federal Government.
The House of Representatives on Wednesday, June 10, 2020, passed the revised 2020 Appropriation Bill of N10.8 trillion, increasing the national budget from the proposed N10.5tn that was sent by President Muhammadu Buhari.
Although the Committees on Appropriations and Finance, whose report was considered and adopted at plenary on Wednesday recommended N10,801,544,664,642, the lawmakers inserted an additional N4bn for the welfare of members of the National Association of Resident Doctors who have threatened strike action.
The lawmakers also approved the request by President Muhammadu Buhari for an external loan of $5.513 billion by the Federal Government (FG).
The Federal Government had planned some cuts on the 2020 budget due to the devastating effect of the coronavirus pandemic and crash of crude oil prices globally. The FG as a result of that had to revise the oil benchmark for the 2020 budget from $57 per barrel to $25 per barrel. The estimated crude oil production was put at 1.9 million barrels per day.
It must also be noted that Nigeria had agreed to the limit its output to 1.412 million barrels per day as part of the OPEC+ deal to help stabilize the oil market.
In his brief explanation during consideration of the budget, Chairman of the Committee on Appropriation, Muktar Betara said, the increase in the revised budget was to make provisions for interventions to cushion the effects of the Covid-19 pandemic on the country.
The lawmakers also approved the president’s request for $5.513 billion external borrowings.
A breakdown of the loan indicated that the Federal Government intends to borrow $3.4 billion from the International Monetary Fund (IMF), for rapid financing instrument; $1,5billion from the World Bank for development policy financing; $500 million from the African Development Bank for Covid-19 crises response budget support operation and $113 million from the Islamic Development Bank (ISDB), to part-finance the 2020 revised budget deficit.
Meanwhile, the Senate is expected to consider the revised budget for passage on Thursday.
In a statement, Senate President Ahmad Lawan said the upper chamber would consider the revised 2020 budget on Thursday, after receiving details of some of the N500 billion COVID-19 intervention fund that is part of the budget.
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Business
IMF lifts 2021 global GDP growth to 6%
The group also warned that economic recoveries are diverging dangerously across and within countries.
The International Monetary Fund has lifted its global growth outlook to 6% in 2021 (0.5% point upgrade) and 4.4% in 2022 (0.2 percentage point upgrade), after an estimated historic contraction of -3.3% in 2020 due to the effects of the COVID-19 pandemic. This disclosure was made on the organisation’s website on Tuesday.
The group also warned that economic recoveries are diverging dangerously across and within countries, as economies with slower vaccine rollout, more limited policy support, and more reliance on tourism do less well.
READ: Corruption erodes the constituency for aid programmes and humanitarian relief – IMF
What the IMF is saying
“The upgrades in global growth for 2021 and 2022 are mainly due to upgrades for advanced economies, particularly to a sizeable upgrade for the United States (1.3 percentage points) that is expected to grow at 6.4 percent this year.
This makes the United States the only large economy projected to surpass the level of GDP it was forecast to have in 2022 in the absence of this pandemic.
China is projected to grow this year at 8.4 percent. While China’s economy had already returned to pre-pandemic GDP in 2020, many other countries are not expected to do so until 2023.”
READ: Nigeria needs structural and monetary policy reforms to unlock potential – IMF
On divergent recoveries
The IMF stated that divergent recovery paths are likely to create wider gaps in living standards across countries compared to pre-pandemic expectations.
“The average annual loss in per capita GDP over 2020–24, relative to pre-pandemic forecasts, is projected to be 5.7 percent in low-income countries and 4.7 percent in emerging markets, while in advanced economies the losses are expected to be smaller at 2.3 percent,” they said.
“Faster progress with vaccinations can uplift the forecast, while a more prolonged pandemic with virus variants that evade vaccines can lead to a sharp downgrade. Multispeed recoveries could pose financial risks if interest rates in the United States rise further in unexpected ways.“
For Africa, IMF forecasts economic growth of 3.4% in 2021 and 4% by 2022, Nigeria is expected to grow by 2.5% in 2021 and 2.3% by 2022, while South Africa is projected to hit growths of 3.1% and 2.0% for the respective years in focus.
READ: The 4th industrial revolution and the birth of a new international monetary system
In case you missed it
The International Monetary Fund (IMF) identified some factors that hamper the economic recovery of low-income countries from the devastating impact of the coronavirus pandemic, factors including access to vaccines, limited policy space to respond to the crisis, the lack of means for extra spending, pre-existing vulnerabilities such as high levels of public debt in many low-income countries and sometimes weak, negative, total factor productivity performance in some low-income countries. These factors continue to act as a drag on growth.
