…Reverses GDP projection on Nigeria from -5.4% contraction to -3.4%
…As states record 26.5 per cent decline in revenue
By Nkiruka Nnorom
Amid a flood of government spending, the global economic downturn sparked by the coronavirus pandemic will not be as bad as originally feared, IMF chief Kristalina Georgieva, said yesterday but warned that the crisis is far from over.
States in Nigeria, however, recorded 26.5 percent decline in revenue in the second quarter of 2020, Q2’20, on the backdrop of the adverse effect of the Coronavirus (COVID-19) pandemic.
In a speech ahead of IMF-World Bank autumn meetings next week, when the IMF is due to present its updated forecasts, Georgieva said: “The picture today is less dire, allowing for a small upward revision to our global forecast for 2020.’’
In June, the Washington-based crisis lender projected a nearly five per cent contraction of global GDP, but results in the second and third quarters were better than expected.
Meanwhile, IMF had reversed its GDP projection on Nigeria from -5.4 per cent contraction to -3.4 percent in 2020, while the World Bank reversed its own to -3.2 per cent from growth rate of 2.1 per cent.
Georgieva credited the “extraordinary policy measures that put a floor under the world economy” which amounted to $12 trillion in fiscal support to households and firms.
But she warned governments not to prematurely withdraw the help they have provided, since the outlook for next year is mixed and rife with uncertainties and risks.
‘Calamity far from over’
After more than a million deaths, “this calamity is far from over. All countries are now facing what I would call ‘The Long Ascent’ — a difficult climb that will be long, uneven, and uncertain,” Georgieva said.
In the United States and Europe the downturn, though painful, was not as bad as economists feared at the outset, and China is seeing “a faster-than-expected recovery.”
But the news elsewhere is bad: “In low-income countries, the shocks are so profound that we face the risk of a ‘lost generation,’” she said.
“There is also now the risk of severe economic scarring from job losses, bankruptcies, and the disruption of education.”
Low-income countries have not had the resources to spend as much to support jobs and businesses, and also will need help to deal with their debt burden, including through more grants and debt restructuring.
She likened the crisis to World War II when leaders “forged a better world in the worst possible moment,” and called for governments to continue support for workers as long as it is needed, while spending to create a better, more equitable, economic system.
“Where the pandemic persists, it is critical to maintain lifelines across the economy, to firms and workers,” she said. “Cut the lifelines too soon, and the Long Ascent becomes a precipitous fall.”
But, Georgieva said: “We cannot afford simply to rebuild the old economy, with its low growth, low productivity, high inequality, and worsening climate crisis,” and she called for more spending on green jobs which can generate more employment.
“This will require both stimuli for job creation, especially in green investment, and cushioning the impact on workers,” she said. “Safeguarding social spending will be critical for a just transition to new jobs.”
She referred to an IMF report released Monday showing that increasing spending by just one per cent of GDP could create 33 million new jobs.
States’ IGR crash
Meanwhile, states in Nigeria have recorded 26.5 percent decline in revenue in the second quarter of 2020, Q2’20, on the backdrop of the adverse effect of the Coronavirus (COVID-19) pandemic.
This development also dragged the first half performance of the Internally Generated Revenue (IGR) of the 36 states of the federation and the Federal Capital Territory, FCT, Abuja, down by 11.7 per cent to N612.9 billion, against N693.9 billion recorded in the corresponding period of 2019, H1’19.
The National Bureau of Statistics (NBS) which gave the IGR figures in its report titled, “Internally Generated Revenue at State Level for H1, 2020”, said that the IGR of the 36 states and FCT fell to N259.73 billion in second quarter (Q2) 2020 from N353.14 billion in Q1 2020.
The report also showed that the IGR recorded by the states during the period represent only 14.33 per cent of the total revenue (N26.18 billion) available to the states, while revenue from FAAC contribution at N23.24 billion represents 85.67 per cent of the total revenue in H1’20.
Lagos State recorded the highest IGR of N204.5 billion, representing 33.37 per cent of the total IGR figure, followed by Rivers State with N64.58 billion, which represents 10.54 per cent of the total IGR.
FCT Abuja, Delta State and Ogun followed with N35.2 billion or 5.74 per cent, N30.8 billion or 5.03 per cent and N28.6 billion, representing 3.86 per cent of the total IGR respectively.
Oyo, Kano, Akwa Ibom, Kaduna and Edo ranked sixth, seventh, eight, ninth and tenth, generating N17.77 billion (2.90%), N17.51 billion (2.86%), N16.21 billion (2.65%), 14.55 billion (2.37%) and N14.01 billion representing 2.29 per cent of the IGR respectively.
On the other hand, Jigawa generated the least IGR of N3 billion, followed by Ekiti with N3.2 billion, Adamawa with N3.75 billion and Gombe with N3.78 billion.