COVID-19: Federal Government of Nigeria Announces Fiscal Stimulus Measures

Tuesday, April 07, 2020 01:37AM / PwC Nigeria/ Header Image Credit: @FinMinNigeria

Nigeria's Minister of Finance, Budget and National Planning hasannounced fiscal stimulus and other interventions in response to Covid-19pandemic and the oil price fiscal shock. Below are the highlights:

COVID-19 Crisis Intervention Fund

Establishment of a N500 billion COVID-19Crisis Intervention Fund to upgrade healthcare facilities and fund SpecialPublic Works Programme to generate employment.
Adequate framework will be put in place forthe collection, management and reporting of donations into the Fund.
COVID-19 Donor Accounts, which will form partof 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$82million) and additional financing from the REDISSE (US$100 million) project tomeet COVID-19 emergency needs by States and the FCT.
FG's N102.5 billion in resources to beavailable for direct interventions in the healthcare sector. Of this sum, N6.5billion has already been made available to the NCDC for critical expenditureand Lagos State has already been provided N10 billion in emergency funding
US$150 million to be withdrawn from theNigeria Sovereign Investment Authority ('NSIA') Stabilization Fund to supportthe June 2020 FAAC disbursement.
Federal Ministry of Finance, Budget andNational Planning will engage with the CBN to agree on a Debt and InterestMoratorium for States on Federal Government and CBN-funded loans, in order tocreate fiscal space for the States.

Budget revision and funding

Revision of the benchmark oil price for 2020to US$30/barrel and oil production to 1.7mbpd.
Concessional funding from World Bank, ADB andthe Islamic Development Bank for the 2020 Budget.
Also funding from IMF's COVID-19 Rapid CreditFacility. Nigeria does not intend to negotiate or enter into a formal programmewith the IMF
Downwards adjustment of non-oil Revenueprojections including various tax and customs receipts, as well as proceeds ofprivatisation exercises
The Budget Office is currently working on arevised 2020 - 2022 Medium Term Expenditure Framework / Fiscal Strategy Paperas well as an Amendment to the 2020 Appropriation Act.
The amended Budget will provide for theCOVID-19 Crisis Intervention Fund

Tax reliefs and allowances

2019 Finance Act already grants taxexemptions to small businesses while the tax rate for medium-sized companieshas been reduced from 30% to 20%
VAT exemption for basic food has beenexpanded while medical and pharmaceutical products are also exempted from VAT
Government to issue circulars and MinisterialOrders for charitable donations in support of COVID-19 Pandemic to be taxdeductible
Activate steps to release and (wherenecessary) enhance the hazard allowances provided in the remuneration structureof the Federal health sector workers. The Federal Government enjoins theaffected States to take similar measures.

Overall,there will be better coordination of Ministries of Finance, Budget and NationalPlanning; Industry, Trade and Investment; Petroleum Resources; Health; as wellas 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 leadthese efforts.

Download Here - MinisterialPress Statement on Fiscal Stimulus Measures in Response to the COVID-19Pandemic & Oil Price Fiscal Shock

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