Nigeria’s Minister of Finance, Budget and National Planning has announced fiscal stimulus and other interventions in response to Covid-19 pandemic and the oil price fiscal shock. Below are the highlights:
COVID-19 Crisis Intervention Fund
- Establishment of a N500 billion COVID-19 Crisis Intervention Fund to upgrade healthcare facilities and fund Special Public Works Programme to generate employment.
- Adequate framework will be put in place for the collection, management and reporting of donations into the Fund.
- COVID-19 Donor Accounts, which will form part of the existing TSA arrangement will be opened with Zenith Bank, Access Bank, Guaranty Trust Bank, UBA and First Bank.
Subnational support
- Draw down on World Bank facility (US$82 million) and additional financing from the REDISSE (US$100 million) project to meet COVID-19 emergency needs by States and the FCT.
- FG’s N102.5 billion in resources to be available for direct interventions in the healthcare sector. Of this sum, N6.5 billion has already been made available to the NCDC for critical expenditure and Lagos State has already been provided N10 billion in emergency funding
- US$150 million to be withdrawn from the Nigeria Sovereign Investment Authority (‘NSIA’) Stabilization Fund to support the June 2020 FAAC disbursement.
- Federal Ministry of Finance, Budget and National Planning will engage with the CBN to agree on a Debt and Interest Moratorium for States on Federal Government and CBN-funded loans, in order to create fiscal space for the States.
Budget revision and funding
- Revision of the benchmark oil price for 2020 to US$30/barrel and oil production to 1.7mbpd.
- Concessional funding from World Bank, ADB and the Islamic Development Bank for the 2020 Budget.
- Also funding from IMF’s COVID-19 Rapid Credit Facility. Nigeria does not intend to negotiate or enter into a formal programme with the IMF
- Downwards adjustment of non-oil Revenue projections including various tax and customs receipts, as well as proceeds of privatisation exercises
- The Budget Office is currently working on a revised 2020 – 2022 Medium Term Expenditure Framework / Fiscal Strategy Paper as well as an Amendment to the 2020 Appropriation Act.
- The amended Budget will provide for the COVID-19 Crisis Intervention Fund
Tax reliefs and allowances
- 2019 Finance Act already grants tax exemptions to small businesses while the tax rate for medium-sized companies has been reduced from 30% to 20%
- VAT exemption for basic food has been expanded while medical and pharmaceutical products are also exempted from VAT
- Government to issue circulars and Ministerial Orders for charitable donations in support of COVID-19 Pandemic to be tax deductible
- Activate steps to release and (where necessary) enhance the hazard allowances provided in the remuneration structure of the Federal health sector workers. The Federal Government enjoins the affected States to take similar measures.
Overall, there will be better coordination of Ministries of Finance, Budget and National Planning; Industry, Trade and Investment; Petroleum Resources; Health; as well as the CBN, to pursue greater coherence and coordination of Nigeria’s fiscal, monetary as well as trade policies, during the difficult days and months ahead. The Economic Sustainability Committee chaired by the Vice President will lead these efforts.
Read details in the attached press statement Download HMFBNP_Fiscal policy response to COVID-19