Nigeria Central Bank Covid-19 Stimulus to Reach $2.7 Billion

LAGOS (Capital Markets in Africa) – Nigeria’s central bank will bolster its support to manufacturing and other key sectors of the economy by 1 trillion naira ($2.7 billion) to counter the fallout of the coronavirus outbreak.
The bank will provide a 100-billion naira loan to health authorities as Africa’s most populous nation tries to contain the spread of the new virus, it said in a statement on Wednesday.
The central bank will increase efforts “in boosting local manufacturing and import substitution by another 1 trillion naira across all critical sectors of the economy,” it said in the statement.
This is the second stimulus package the central bank unveiled in as many days as authorities try to cope with the collapse of crude prices, which account for about 90% of foreign exchange earnings and more than half of revenues. The regulator on Monday approved a one-year moratorium on all principal debt repayments from March 1, and reduced to 5% from 9% the interest rate on central bank intervention loans that are given directly to agriculture and commerce.
Even with that stimulus some economists predict the collapse in oil prices as a result of the coronavirus outbreak could push Africa’s largest economy into recession this year.
The West African nation plans to cut its 10.6 trillion naira ($28b) budget for the year by at least 1.5 trillion naira following the coronavirus pandemic and a plunge in the price of oil, Nigeria Finance Minister Zainab Ahmed said on Wednesday.
The government revenues will decline by about 40% to 45% this year due to the lower oil prices, Ahmed said.
Nigeria will now peg the price of oil at “a worst-case scenario of” of $30 a barrel, down from $57 a barrel signed into law earlier this year, and targets output of 2.1 million barrels a day.
The government needs to cut further and prioritize more, said Oluwasegun Akinwale, an analyst with Nova Merchant Bank in Lagos.
“All non-essential expenses should be cut as deep as they can and the funds transferred to support the necessary sectors,” said Akinwale.

Source: Bloomberg Business News