#1Federal Government of Nigeria Strictly Private and Confidential Global Investor Call Addressing COVID-19 in Nigeria 23 June 2020#2Representatives of the Federal Government of Nigeria Federal Ministry of Finance, Budget and National Planning Mrs. (Dr) Zainab Shamsuna Ahmed Hon. Minister of Finance, Budget and National Planning Mr. Godwin Emefiele Governor, Central Bank of Nigeria (CBN) Mr. Ben Akabueze Director-General, Budget Office of the Federation (BOF) Ms. Patience Oniha Director-General, Debt Management Office (DMO) Dr. Osagie Ehanire Hon. Minister of Health (MOH) 1#3VVV www www Mwz wwwwwwn wwww wwwsz www UNITY AND FAITH, PEACE AND PROGRESS JAM Mus Macroeconomic & Fiscal Response Speaker: Hon. Minister of Finance, Budget and National Planning#4Developments Developments have primarily been shaped by the COVID-19 pandemic and developments in the crude oil market. The Federal Government and its agencies have responded decisively to stimulate the economy. January 13 Nigeria ratifies landmark Finance Act to increase VAT rate and provide tax reliefs for small businesses February 24 Nigeria reports 2.55% Y-o- Y GDP growth in Q4 2019 - the highest quarterly growth since the 2016 recession March 08 Collapse of OPEC production cut discussions and subsequent price war plunges oil price to historic lows March 09 President Buhari sets up 12-member Presidential Task Force on COVID-19 April 06 Ministry of Finance, Budget and National Planning announces fiscal stimulus measures and proposed amendments to 2020 Appropriation Act April 06 Fitch downgrades Nigeria from B+ (Negative) to B (Negative) May 25 Nigeria reports 1.87% Y- o-Y Real GDP growth in Q1 2020, despite weakening global economic conditions June 13 Economic Sustainability Plan launched to respond to challenges posed by the COVID-19 pandemic and to propose wide ranging policy response measures Jan-20 Feb-20 Federal Ministry of Finance, Budget and National Planning 2 Mar-20 Apr-20 May-20 Jun-20 February 27 First case of COVID-19 confirmed in Nigeria March 18 Central Bank of Nigeria announces stimulus package in response to COVID-19 March 26 S&P downgrades Nigeria from B (Negative) to B- (Stable) March 30 Cessation of all movement in Lagos State, Ogun State and the Federal Capital Territory due to COVID-19 under the Quarantine Act April 15 Moody's affirms Nigeria B2 (Negative) rating / outlook April 28 IMF approves $3.4bn Rapid Financing Instrument facility to support Nigeria's Fiscal and Balance of Payment needs May 13 FEC passed a revised 2020 Budget and MTEF May 28 NASS convenes to deliberate on 2020 Budget and MTEF June 11 Passage of the Revised 2020 Budget by NASS#5Nigerian Economic Output Broadly Diversified Oil exports remain the highest single source of revenue, however, the broader economy is fairly diversified - 91% of economic output is in the non-oil sector and 35% of total labour force is in a resilient agricultural sector. 2019 GDP Share by Sector Financial Sector 3% Transportation 2% Other Services 3% Professional Services 3% Construction 6% Real Estate Others 7% Agriculture 22% 6% Trade 16% Oil and Gas 9% ICT 11% Manufacturing 12% Economic output diversified from Oil & Gas 9% N146 Trn 91% ■Non-Oil Oil Federal Ministry of Finance, Budget and National Planning 3 Source: Nigeria National Bureau of Statistics, CBN 2019 Real GDP Growth Rate by Sector (2010 Constant Basic Prices) 11.1% ICT 10.7% Transport 5.5% 4.6% 4.4% 4.1% Water Oil and Gas Mining Arts Source: Nigeria National Bureau of Statistics, CBN Real GDP Growth Rate 2017 - 2021 (%, yoy) 2.9% 2.3% 1.9% 0.8% 2017 2018 2019 (4.4%) 2020F Source: Ministry of Finance, Budget & National Planning, Nigeria National Bureau of Statistics 2021F#6COVID-19 Impact on the Budget and Fiscal Policy Response Federal Ministry of Fiscal Impact of COVID-19 Pandemic ▪ Reduction in FGN revenue available for budget (including GOEs) from N8.4 trillion to N5.6 trillion COVID-19 related fiscal expenditure of N500 billion GDP swing from 2.9% growth forecast pre COVID-19 to 4.4% contraction post COVID-19 Amendment of The 2020 Appropriation Act & MTEF 2020-2022 & Fiscal Strategy Paper Proposed fiscal gap of c. US$13.8 billion for 2020 (previously US$7.1 billion) ■ Revision of the benchmark oil price for 2020 to US$25/barrel (previously US$57/barrel) and oil production to 1.9mbpd (previously 2.18mbpd) ■ Downward adjustment of Non-Oil Revenue projections including various tax and customs receipts, as well as proceeds of privatisation exercises Adjustment in Budget Exchange Rate to N360/US$1 from N305/US$1 Other Policy Measures Removal of fuel subsidies regime ■ Full cost reflective power tariffs in 2021 Finance, Budget and National Planning Proactive and people-centred response with flexibility to adjust as the situation evolves 4 Source: Ministry of Finance, Budget and National Planning#7Revised 2020-2022 Medium Term Fiscal Framework 2020 2020 2021 2022 In US$ Billions (unless otherwise stated) as Passed NASS Proposed Revision Revised Projections Revised Projections Average Exchange rate (NGN/USD) 305.0 360.0 360.0 360.0 Projected Budget Benchmark Oil Price 57.00 25.00 35.00 40.00 (US$ per barrel) Oil Production Volume Net Incremental for Arrears 2.18 1.90 1.93 2.22 Repayment (mbpd) Total Revenue, o/w 27.6 15.4 19.1 23.0 Oil & Gas Revenue (incl. NLNG dividends and Minerals & Mining and 12.1 3.8 5.6 8.1 Signature Bonus) Non-Oil Revenue 15.5 11.7 13.5 14.9 Total Expenditure, o/w (34.7) (29.2) (29.3) (30.7) Debt Service (8.0) (7.4) (8.7) (9.7) Fiscal Balance (incl. GOES and Project-tied Loans) (7.1) (13.8) (10.2) (7.6) Fiscal Balance (% GDP) (1.5) (3.6) (2.6) (1.9) Sources of funding 7.1 13.8 10.2 7.6 Sale of FNG Property 0.4 0.3 I Privatization 0.8 0.4 0.8 Bi-/Multilateral Project-tied Loans 1.1 1.1 0.7 230 0.7 0.3 I Borrowing from Special Accounts 0.7 New Borrowings, o/w 5.2 11.6 8.3 6.3 Domestic Borrowings 2.4 6.1 4.2 3.1 Foreign Borrowings 2.8 5.5 4.2 3.1 Fiscal Balance (excl. GOES and Project-tied Loans) (6.1) Fiscal Balance (% GDP) (1.3) (12.7) (3.31) (9.6) (7.3) (2.4) (1.8) Note: (1) Under normal circumstances, the fiscal deficit is capped at 3.0% of GDP. Higher fiscal deficit was approved, on an exceptional basis under the FRA, due to the impact of COVID-19 on the economy. Federal Ministry of Finance, Budget and National Planning 5 Source: Ministry of Finance, Budget and National Planning - Subject to Final Approvals#8Funding Fiscal Nigeria has access to adequate concessional financing, a resilient domestic securities market and reserves buffer to finance both the fiscal (US$13.8bn) and Balance of Payments (c. US$14.0bn) gap. Funding Fiscal Gap In US$ Billions Sources of funding Sale of FNG Property Privatization Bi-/Multilateral Project-tied Loans Borrowing from Special Accounts New Borrowings, o/w Domestic Borrowings Foreign Borrowings External Financing Sources 2020 as Passed NASS 2020 2021 2022 Proposed Revision Revised Projections Revised Projections 7.1 13.8 10.2 7.6 0.4 0.3 0.8 0.4 0.8 0.7 1.1 1.1 0.7 0.3 - 0.7 5.2 11.6 8.3 6.3 2.4 6.1 4.2 3.1 2.8 5.5 4.2 3.1 In US$ Billions Amount Status Sources & Uses 5.5bn International Monetary Fund 3.4 Approved ✓ World Bank 1.5 In Discussion African Development Bank 0.5 Partially Approved ($288.5mn)* Islamic Development Bank 0.1 * Remainder of expected African Development Bank loan amount to be approved later In Discussion Federal Ministry.co Finance, Budget and National Planning 6 Source: Debt Management Office Key Comments Higher domestic borrowing will be raised through various securities in the domestic markets The new $5.5bn of foreign borrowings will also be counted towards international reserves#9Debt Profile Domestic debt access is robust and is reflected in composition of public debt currently. External debt composition also reflects access to multilateral and bilateral funding. Total External Public Debt by Type As of 31 December 2019 As of 31 December 2019 Total Domestic Public Debt by Type Promissory Others Notes 2.6% 5.1% Sukuk, Green Bond, Savings Bond, T-bond Commercial 40.4% Bilateral 13.9% Federal Ministry of Finance, Budget and National Planning 7 Source: Debt Management Office Multilateral 45.7% Nigerian T-Bills 18.6% Total Public Debt As of 31 December 2019 Total External Public Debt 32.9% Total Domestic Public Debt 67.1% $84.1bn FGN Bonds 73.7%#10Fiscal Policy Response to COVID-19 Nigeria has swiftly introduced fiscal measures to protect people, jobs and the economy. Key Fiscal Measures Establishment of a N500 billion COVID-19 Crisis Intervention Fund to be utilised on: o Upgrade of healthcare facilities; 。 Finance interventions to improve healthcare facilities; 。 Finance the creation of a Special Public Works Programme to employ 774,000 Nigerians Enhanced financial support to the States for critical healthcare expenditure o Requested access for NCDC to draw on remaining US$82 million World Bank Regional Disease Surveillance Systems (REDISSE) facility. US$8 million already drawn o Requested for additional financing of US$100 million from REDISSE to meet COVID-19 emergency needs in all the 36 States and the FCT, through the NCDC and Federal Ministry of Health 。 Ministry of Finance, Budget and National Planning is engaging with the CBN on a Principal and Interest Moratorium for States on Federal Government and CBN-funded loans Federal Ministry of Finance, Budget and National Planning Source: Ministry of Finance, Budget and National Planning 8#11Fiscal Policy Response to COVID-19 (cont'd) Nigeria has swiftly introduced fiscal measures to protect people, jobs and the economy. Key Fiscal Measures Allocated N102.5 billion (c. US$335 million) in resources to be available for direct interventions in the healthcare sector 。 Of this sum, N6.5 billion has already been made available to the Nigeria Centre for Disease Control ("NCDC”) for critical expenditure 。 Lagos State has already been provided N10 billion in emergency funding. 。 Explicit criteria are to be agreed with the Federal Ministry of Health and the NCDC to determine when funds would be released to the affected States and the FCT 。 More funds are to be provided from the proposed COVID-19 Crisis Intervention Fund to address emerging and priority funding needs US$150 million to be drawn from the Nigeria Sovereign Investment Authority ("NSIA") Stabilization Fund to augment the Federation Account Allocation Committee ("FAAC") disbursements Significant tax relief for Micro, Small and Medium-sized Enterprises (MSMEs) 。 Extension of time for filing VAT and withholding tax from 21st to the last working day of the month, following the month of deduction. 。 The due date for filing Companies Income Tax returns has been extended by one month. 。 Taxpayers may file returns using unaudited accounts but must subsequently submit audited accounts within two months after the revised due date of filing 。 Expanded VAT Exemption List for essential food, medical supplies and other basic items critical to address the COVID-19 Pandemic Cash donations by corporates to be tax deductible o Establishment of a COVID-19 Relief Fund Account domiciled with CBN for cash donations by corporates and individuals Federal Ministry of Finance, Budget and National Planning Source: Ministry of Finance, Budget and National Planning 9#12VVV www www Mwz wwwwwwn wwww wwwsz www UNITY AND FAITH, PEACE AND PROGRESS JAM Mus Central Bank of Nigeria's Response Speaker: The Governor of the Central Bank of Nigeria#13Inflation & Exchange Rate Inflation ✓ Depreciation of the Naira along with supply shocks attributed to COVID-19 led to a gradual rise in inflation. ✓ Inflation ticked at 12.40% yoy in May 2020 relative to 12.34% in April 2020 ✓ We, however, expect inflation to begin a downward trend in Q4 2020 given strengthened emphasis on improving productivity in the agriculture and manufacturing sectors Inflation & MPR (% yoy) Exchange Rate ✓ Given the drop in crude oil prices, and its impact on the foreign exchange earnings, NGN/USD rate experienced a 18% depreciation at the official exchange rate window Exchange rate adjusted from N305/$ to N360/$ in March 2020 Band between the official exchange rate and the NAFEX window continues to narrow. N/$ rate at NAFEX window depreciated from N360/$ to N385/$ ✓ CBN will continue to work towards a gradual unification of rates across all FX windows NGN/USD Exchange rate 9.4 18.7 16.5 13.0 12.0 14.0 16.3 15.1 11.2 13.5 450 400 12.5 350 11.0 12.4 300 250 200 Sep-15 Apr-16 Nov-16 Jun-17 Jan-18 Inflation Aug-18 MPR Mar-19 Oct-19 May-20 May-18 Sep-18 Jan-19 May-19 Sep-19 Jan-20 May-20 NAFEX Official Federal Ministry of Finance, Budget and National Planning Source: Central Bank of Nigeria 10#14COVID-19 Impact on External Position Balance of Payment BOP funding estimate of US$14bn in 2020 ■ Crude oil and gas exports will decrease in line with softer demand and drop in oil prices " Imports expected to decrease as well in line with general economic slowdown and drop in refined oil product prices Retreat to safe haven assets likely to influence capital outflows in 2020 Widened deficit will be financed with a combination of reserves and new financing from multilateral lenders External Reserves FX Reserves (US$ billion) 1 44 44 43 43 41 40 40 39 38 37 36 =4 34 33 33 36 Jun 19 Jul 19 Aug 19 Sep 19 Oct 19 Nov 19 Dec 19 Jan 20 Feb 20 Mar 20 ■Liquid Blocked Apr 20 May 20 Federal Ministry of Finance, Budget and National Planning 11 Source: Central Bank of Nigeria US$8.5bn decline due to: c. US$21bn increase in imports in 2019 Offshore investors exiting OMO bills market in 2H 2019 and Q1 2020 Import Cover ■ Dec' 2019 FX reserves of US$38bn represented a goods and services import cover of 5.2 months or 9.1 months of goods only import cover Demand for imports expected to slow down, easing pressure on import cover#15Nigerian Banking Sector Banking sector remains adequately capitalized with adequate buffers to absorb shocks. CBN has reacted appropriately by putting in place measures to boost banking sector liquidity ✓ Overview Total Credit increased by N3.16 trillion (c. US$8bn) or 20.45% between end-April 2019 and end April 2020 。 This was due largely to the CBN's directive to banks on Loan Deposit Ratios, which encouraged increased lending Robust buffers prior to the COVID-19 crisis and additional measures introduced by the CBN will help maintain the resilience of Nigerian banks NPL ratios have declined significantly since September 2018 In order to deal with the impact of COVID-19, regulatory forbearance has been granted to banks in assessing loans to firms significantly impacted by the virus 。 Such firms may be granted a moratorium on loan repayments as well as restructuring of existing loans Gross Credit (N Trillion) Non-Performing Loan Ratio (% Total Loans) 18.6 16.1 15.5 15.5 13.4 13.4 11.0 14.0 11.7 11.3 11.0 9.4 9.4 6.6 6.5 6.6 6.1 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 Jul-18 Oct-18 Feb-19 May-19 Aug-19 Dec-19 Mar-20 Jun-20 Federal Ministry of Finance, Budget and National Planning Source: Central Bank of Nigeria 12#16CBN Policy Response to COVID-19 CBN has responded decisively to provide the necessary monetary stimulus for the Nigerian economy. The Monetary Policy Committee reduced the Monetary Policy Rate in May 2020. The Banking Sector also remains stable and well capitalized. Key Central Bank Measures Establishment of N1.1 trillion intervention fund to cushion the adverse effects of the Coronavirus outbreak on the economy Establishment of a N50 billion fund to support households and Small and Medium Enterprises (SMEs) affected by COVID-19 Federal Ministry of Finance, Budget and National Planning Source: Central Bank of Nigeria 13 CENTRAL BANK OF NIGERIA N107.25bn disbursed to boost local manufacturing and production across critical sectors N100 billion earmarked for the health services sector through the provision of loans to operators in the healthcare sector#17VVV www www Mwz wwwwwwn wwww wwwsz www UNITY AND FAITH, PEACE AND PROGRESS JAM Mus COVID-19 Response & Health Infrastructure Speaker: Hon. Minister of Health#18Age Group Nigeria's COVID-19 Status as of 20th June 2020 Nigeria has responded swiftly to contain the pandemic. COVID-19 Response is jointly managed by the Presidential Task- Force on COVID-19 Response, the Nigeria Centre for Disease Control and the Ministry of Health simultaneously. ■ Nigeria's COVID-19 Index Case was confirmed on February 27, 2020 Daily Status Briefings are led by the Nigeria Centre for Disease Control ("NCDC") and Presidential Task-Force ("PTF") ■The PTF's mandate is to coordinate and oversee Nigeria's multi-sectoral inter-governmental efforts to contain the spread and mitigate the impact of the COVID-19 pandemic in Nigeria. > 70 61-70 51-60 41-50 31-40 21-30 11-20 ≤10 111,052 Tested 19,808 Cases 6,718 Discharged 506 Deaths 30 Guidelines & Advisories Age-Sex Distribution of Confirmed Cases Sokoto ! ! State of the Nation Katsina Zamfara Male Kebbi ■Female 4000 3000 2000 1000 1000 Number of Confirmed Cases 0 2000 Federal Ministry of Finance, Budget and National Planning 14 Source: Nigeria Centre for Disease Control Kwara Kaduna Niger Kano Jigawa Yobe Borno Bauchi Plateau FCT Nasarawa Oyo Ekiti Kogi Osun Ogun Lagos Ondo Edo Enuge Anam Taraba Benue Delta Ebonyi Imo Abia Crossriver Bayelsa Rivers Akwa Ibom Adamawa Legend (Outbreak Status) > 1000 cases 501-1000 cases 101-500 cases 1-100 cases#19Conclusion Response has been people oriented to protect citizen's health, jobs and the real economy Nigeria is responding effectively to the twin shocks of the Global Pandemic and the Drop in Oil Price/Economic Contraction ○ Economic management team duly recognized the scale of the fiscal/budget, BOP and health challenges ○ Economic Sustainability Plan launched to replace Vision 2020 О Quick Combined Reaction: HMFB&NP and her economic team; Monetary Policy authorities and Health/Pandemic Management teams (FMH/NCDC/PTF); have all acted decisively and quickly Thus far, the Nigerian health systems and isolation centers have not been overwhelmed by the COVID-19 pandemic. Number of fatalities remains low relative to population size. Vigorous oversight by the authorities will continue The Nigerian economy is ultimately resilient due to favourable demographics and a diversified real economy in which Government's share of economic activity is relatively small ✓ We are confident that the informal and resilient private sector will continue to anchor a large domestic economy ✓ Access to external concessional funding: The IMF RFI approved by the IMF Board in May. Ongoing discussions with the World Bank and other MLA's will raise the required amount of concessional external funding >$6.5Bn, to see the FGN through 2020. Balance to be raised in domestic debt market Deep domestic debt market will adequately provide the balance required to plug the gap without crowding out the private sector ✓ Adequate reserves buffer to weather external shocks Federal Ministry of Finance, Budget and National Planning 15