INTERNATIONAL - Nigeria’s fiscal and monetary authorities will announce measures in coming days to deal with the economic fallout from the coronavirus outbreak.
“We will not hesitate to deploy additional measures to shield the Nigerian economy from headwinds,” central bank Governor Godwin Emefiele said at a conference in the capital, Abuja, on Wednesday.
The International Monetary Fund has cut its projection for Nigeria’s 2020 economic growth to 2% from 2.5% due to plunging oil prices stemming from the coronavirus outbreak. The West African nation is the continent’s biggest producer and depends on crude for 90% of its exports.
Nigeria will need at least three months to clear a production backlog even if crude prices recover, Mele Kyari, chief executive officer of state-owned Nigerian National Petroleum Corp., said. The country has 50 unsold cargoes. He said he hoped that the oil price drop may have seen the bottom already.
The oil price shock due to the coronavirus came as a great surprise to the Nigerian government and the impact has put significant strain om the budget and the currency, Finance Minister Zainab Ahmed said at the same conference. The government may have to adjust its 2020 budget, which was based on a crude price of $57 a barrel, she said last week.
“These very strong headwinds are a wake-up call for us to look toward life without oil,” Ahmed said. “This is the right time government to take measures.”
While the central bank has made it clear it wants to help boost output, inflation that’s been above the target band since 2015 limits the scope for interest-rate cuts. Last year, Emefiele twice announced an increase to the minimum loan-to-deposit ratios for lenders to force them to give out more credit.
Banks have responded positively to this and the measure will be maintained, Emefiele said.