LAST week, the federal government through the minister of finance, budget and national planning, Zainab Ahmed, announced the proposed cut of the 2020 budget by N1.5 trillion.

This implies that if approved by the National Assembly, the nation’s 2020 budget will be cut by 14.16 per cent, from N10.59 trillion to N9.09 trillion.

This is based on the drastic plunge in global oil price which currently sold at $25.06 per barrel, the lowest since April 2003.

This cannot be  disconnected from the global outbreak of the deadly coronavirus after it first emerged in China.

According to the minister, “a 25 per cent cut of all government-owned enterprises and these include the ones that are in the national budget, the 10 top ones we included in the 2020 budget but also those we did not include in the 2020 budget.

“So, all of these would have their recurrent expenditure and capital expenditure cut down by 25 per cent.

“By these measures, we expect that the operating surpluses that would accrue to the federation will increase because when their operational expenditure reduces the operating surpluses that they remit to the treasury will also increase significantly.”

Diversification, oil price normalization are the remedy- Analyst

Based on the adverse economic effect of coronavirus, part of which is the slow economic growth, significant decline in oil price and trade imbalances, It is evident that the 2016 tales of recession may repeat itself again.

Financial analysts in. an interview with The ICIR have expressed concern over the government’s proposal to cut the 2020 budget by N1.5trillion.

A market research analyst and expert, Seyi Kolawole, in his own view explained that government’s move will only exacerbate the current situation and the looming recession can be realistic.

“The budget cut is really not a solution for the impending recession. Actually, it makes our situation a bit worse off”

He said the only antidote to the impeding recession is for the oil price to bounce back to the benchmark of $57 per barrel.

“Our revenues are under attack as a result of the massive fall in oil prices (our major source of revenue). Only a reversal of this fall (which is unlikely in the short term) can potentially save us from a recession.

“A diversified Nigerian economy would have helped to shore up our revenues but we have failed to achieve that yet and the irony is that some projects to help diversify the economy will be cut from the budget because we don’t have the money to fund them. So we remain oil dependent.

“I don’t think there is any quick fix for the pending recession, individuals and businesses can brace up themselves as usual and hope for a quick vaccine for the Coronavirus.

“In addition, the government needs to very quickly kick start the drive to diversify the economy strategically once we make it out of this recession in preparation for the next disaster that may affect oil prices which I believe may not be too far off.”

Nigerians over time  have been clamouring for the overhaul and diversification of the Nigerian economy from the oil sector as global oil price affects the whole country’s well-being financially.

Nigeria is the largest oil and gas producer in the whole of Africa with 10th largest oil reserves in the world.