The first-order effects of a rapid spread of COVID-19 could be far-reaching for a Nigerian economy that is already reeling from depressed oil prices and high unemployment. These consequences could include:
- Further restrictions on movement
- Fall in economic activities
- Weaker demand for non-essentials
- Industrial redundancies
- Business failures
- Layoff of workers
- Economic recession
In line with happenings in global economies, Nigeria may have realized that an interplay of monetary and fiscal intervention packages will be needed to steer the economy through potentially graver headwinds. Precisely, the Central Bank of Nigeria (CBN) and the fiscal authorities have rolled out policy measures to help alleviate the negative impact of COVID-19 pandemic on the economy. These measures include 1) the introduction of stimulus by the CBN; 2) naira devaluation at the Investors & Exporters (I&E), Bureau De Change (BDC), and official markets; 3) redirection of upstream oil & gas dollar sales to the CBN instead of NNPC; 4) direct interventions by the fiscal authorities; 5) downward review of the 2020 fiscal budget.
In this report, we review these new policy responses and delineate the potential impacts on broad macro-economic variables in coming quarters.