The Federal Government has confirmed that there was a possibility of global economic recession this year, but stressed that Nigeria’s foreign exchange reserves were healthy enough to withstand the shocks.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, disclosed this on Tuesday on the sidelines of the World Economic Forum in Davos, while speaking during an interview with Arise TV.
She said that the ambitious N10tn revenue target of the Federal Government, as projected in the 2023 budget, would be met, based on various measures that had been put in place.
Hear her: “Clearly there is going to be a decline in growth. And why we are having this decline in growth because of the sustained economic impact of the COVID-19 pandemic.
“We’ve seen the resurgence of COVID-19 in some developed economies, especially China, and also the effect of the Russia-Ukraine war that is having a global impact.
“The quantitative easing that is being implemented by central banks across the world also contributes to the high cost of interest, resulting in the high inflation rate, and which means people’s spending power is weakened. So these are all indications that there will be a global recession.”
The minister was made to understand that in 2008 when there was a global recession, Nigeria’s foreign exchange reserves were in excess of $60bn and the country was able to withstand the impact of that recession.
Asked if the country would be able to withstand another recession this year, going by its current reserves, Ahmed replied in the affirmative.
She said, “It is true that’s our reserves during the first global recession. Our reserves are now down to $34bn, and that is still a healthy level. It means we are 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 are able to carry through a coordinated response between the monetary, fiscal as well as trade authorities. We have learnt a lot from the experience that we went through during the COVID and it shows that when we plan well we can actually withstand the shocks.
“You’ll recall that Nigeria’s economy did go into recession during the COVID but it was a short-lived one because of that coordinated response, which had not just government, but also the private sector contributing to the effort.”
She added, “Also, at that time we were able to scale back on some categories of government spending to enable us to invest more in the healthcare sector. So with the right policies we can weather another global recession.”
